THE PRACTICALITIES OF INDEMNITY IN COMMERCIAL CONTRACTS
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Keywords:
Indemnity, Commercial Contract, Contract Drafting, Reviewing and Negotiating, Investment Agreement, Share Purchase Agreement, Share Subscription AgreementAbstract
This paper examines the role and purpose of indemnity clauses in contracts, in light of the provisions of the Indian Contract Act, 1872 and relevant case laws. It also focuses on the practicality of including an indemnity clause in a commercial contract. Several key points have been highlighted which should be considered from the perspective of an indemnifying party (e.g.: promoters of a company receiving investment by way of subscription to shares are indemnifying parties with respect to the investor).
In light of the foregoing and as a conclusion to this research, an appropriate way to draft an indemnity clause in an investment agreement (e.g. for subscription of shares by an investor into a target company), keeping in mind the concerns of the indemnifying party have been summarized.
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