This form provides boilerplate contract clauses that outline means of securing the funds for payment of any indemnity, including use of an escrow fund or set-offs.
New Mexico Indemnity Provisions — Means of Securing the Payment of the Indemnity In New Mexico, indemnity provisions are an essential component of various contracts and agreements. These provisions safeguard one party (the indemnity) by requiring another party (the indemnity) to bear the financial responsibility for any damages, losses, or liabilities that may arise during the course of the contractual relationship. But what are the means of securing the payment of this indemnity? Let's explore this topic further. There are several types of indemnity provisions used in New Mexico, each with its own methods for securing payment. Some commonly used provisions include: 1. General Indemnity Provision: This is the most basic type of indemnity provision, obligating the indemnity to indemnify and hold harmless the indemnity from any claims, damages, or losses. The means of securing payment under such a provision can include posting a bond or providing a letter of credit to demonstrate financial capability. 2. Specific Indemnity Provision: This provision limits the scope of indemnification to specific risks or liabilities outlined in the contract. It may specify the means of securing payment, such as requiring the indemnity to maintain an insurance policy with coverage for the specified risks. 3. Comparative Fault Indemnity Provision: In New Mexico, comparative fault principles allow for a fair allocation of liability between parties involved in a contract. A comparative fault indemnity provision may apportion responsibility based on the degree of fault each party bears. The means of securing payment could be through establishing a trust account or setting aside a sum of money to cover potential liability. 4. Joint and Several Indemnity provisions: Under this provision, the indemnity becomes responsible for the entire indemnity obligation, even if other parties are also at fault. In such cases, securing payment may require the indemnity to provide a personal guarantee or pledge assets as collateral. 5. Third-Party Beneficiary Indemnity Provision: This provision extends indemnification rights to a third party not directly involved in the contract but who may suffer harm as a result of the transaction. The means of securing payment stipulated by this provision could involve obtaining an additional insurance policy naming the third party as an additional insured. 6. Indemnification Trust Fund: In certain circumstances, an indemnification trust fund may be established to secure payment of indemnity obligations. This fund would typically be funded by the indemnity or the parties involved, and its purpose is to provide a financial guarantee for potential indemnity claims. These various New Mexico indemnity provisions serve to protect parties from potential financial harm and provide a mechanism for securing the payment of indemnity. It is important to carefully review and negotiate these provisions to ensure clarity and fairness for all parties involved in a contract or agreement.
