This form provides boilerplate contract clauses that restrict or limit the dollar exposure of any indemnity under the contract agreement. Several different language options are included to suit individual needs and circumstances.
Michigan Indemnity Provisions — Dollar Exposure of the Indemnity regarding Baskets, Caps, and Ceilings Indemnity provisions are an essential component of contracts and agreements that protect parties from financial losses or liabilities. In the state of Michigan, specific considerations are given to the dollar exposure of indemnity, particularly in relation to baskets, caps, and ceilings. 1. Baskets: In indemnity provisions, baskets refer to thresholds or limits beyond which the indemnifying party becomes liable for indemnity payments. The baskets can be structured in various ways to determine when the indemnity obligation is triggered. Michigan's law allows for negotiation and customization of basket thresholds based on the specific needs and nature of the agreement. 2. Caps: Caps are maximum limits on indemnity payments that restrict the total amount the indemnifying party is obligated to pay. If the indemnity exceeds the cap, the indemnifying party is typically not liable for the excess amount. The cap can be set as a fixed dollar figure or a percentage of the contract value. 3. Ceilings: Ceilings in indemnity provisions establish an upper limit on the indemnity amount for certain types of damages or losses. They protect the indemnifying party from excessive liability exposure in the event of catastrophic or unforeseen circumstances. Ceilings can be used to restrict indemnity claims for specific types of damages, such as indirect or consequential damages. Different types of Michigan Indemnity Provisions — Dollar Exposure of the Indemnity regarding Baskets, Caps, and Ceilings: 1. Threshold Baskets: These types of indemnity provisions specify that indemnity payments are only triggered once certain financial thresholds or specified levels of loss are reached. For example, a contract may stipulate that indemnity will be provided only if the total losses incurred exceed $100,000. 2. Deductible Baskets: Deductible baskets establish a minimum threshold below which the indemnifying party is not liable for indemnity payments. The indemnity obligation is triggered only when losses exceed this deductible amount. For instance, a contract might state that indemnity will only apply if losses exceed $50,000. 3. Single Basket Provisions: Single basket provisions combine all types of potential claims, losses, or damages into a single threshold. If the cumulative amount of losses exceeds this basket, the indemnifying party becomes liable for indemnity payments. 4. Dual Basket Provisions: Dual basket provisions differentiate between general indemnity claims and claims arising from specific categories. Each basket may have different thresholds, caps, or ceilings attached to it. For example, one basket may cover general damages, while another basket may be reserved for specific types of damages like intellectual property breaches or environmental damages. Ensuring proper consideration and negotiation of Michigan Indemnity Provisions regarding Baskets, Caps, and Ceilings is crucial to safeguard the interests of all parties involved and manage potential financial exposures effectively.
