As a business customer, you may work with various suppliers during your business journey. Nevertheless, entering any business relationship will entail legal risks. The supplier agreement will provide the legal framework for the business relationship. However, the agreement might not adequately protect your business in the event of a dispute. This article will explore how a supplier indemnity can protect your business from risk.<\/p>\n\n\n\n
When you sign a contract with a supplier, you are exposing your business to risk. As a customer entrusting a new supplier, several things could go wrong. For example, the supplier:<\/p>\n\n\n\n
These problems could create huge risks and losses for your business. Therefore, you should negotiate contractual protection to safeguard your business from risks that could arise during the commercial relationship.<\/p>\n\n\n\n
A fundamental way to protect yourself from risk is to sign a robust written commercial contract with suppliers. Your supplier contract should set out:<\/p>\n\n\n\n
However, not all supplier agreements will favour business customers. Therefore, it might be necessary to obtain supplier indemnity.<\/p>\n\n\n\n\n\n\n
Indemnities are key clauses people and businesses use to address specific known risks under a contract. In simple terms, an indemnity is where one party – the indemnifying party – promises to pay the other party – the indemnified party – for a specific loss they suffer under the contract if a trigger event occurs.<\/p>\n\n\n\n
The agreement will determine the trigger event and when the indemnifying party needs to pay for the loss. The trigger event could be the indemnifying party\u2019s:<\/p>\n\n\n\n