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.
Oregon Indemnity Provisions — Dollar Exposure of the Indemnity regarding Baskets, Caps, and Ceilings In Oregon, indemnity provisions play a critical role in various legal agreements, ensuring parties are protected from financial risks and liabilities. Specifically, the dollar exposure of the indemnity is influenced by three key components: baskets, caps, and ceilings. Let's take a closer look at these provisions and how they affect the indemnity in different scenarios. 1. Baskets: Baskets refer to an amount or threshold that needs to be exceeded before the indemnifying party becomes liable for indemnification. In Oregon, different types of baskets may be used, including deductible baskets, aggregate baskets, and mini-baskets. — Deductible Baskets: These baskets require the indemnified party to surpass a specified deductible amount before seeking indemnification. For example, if the deductible basket is set at $10,000, any losses or damages under this threshold will not trigger the indemnity. — Aggregate Baskets: In some cases, Oregon indemnity provisions include aggregate baskets, where multiple claims or losses can be accumulated to reach the required threshold. For instance, if the aggregate basket is set at $50,000, multiple smaller claims adding up to this amount may trigger the indemnity. — Mini-Baskets: These baskets operate similarly to deductible baskets but apply to specific categories or types of indemnification. They allow parties to set different thresholds for different types of claims, protecting them from small or insignificant losses. 2. Caps: Caps establish the maximum amount of indemnification that the indemnifying party is obligated to provide in any given situation. These caps are designed to limit the potential financial exposure of the indemnifying party. Some types of caps seen in Oregon indemnity provisions are: — Ascending Caps: Ascending caps refer to caps that increase over time as the agreement progresses. For example, the indemnifying party may agree to a $100,000 cap for the first year, which increases by 10% annually. — Flat Caps: Flat caps, on the other hand, set a consistent maximum liability throughout the entire agreement. For instance, the indemnifying party may agree to a $500,000 flat cap, regardless of the contract's duration. 3. Ceilings: Ceilings establish an ultimate maximum limit to the indemnifying party's liability under the indemnity provision. In Oregon, ceilings can be absolute or relative: — Absolute Ceilings: Absolute ceilings set an absolute maximum limit to indemnification, regardless of the circumstances. If an absolute ceiling is set at $1 million, the indemnifying party's liability cannot exceed this amount, regardless of the losses incurred. — Relative Ceilings: Relative ceilings, on the other hand, are determined in relation to specific factors such as the contract value, revenue, or expenses. For example, if a relative ceiling is set at 10% of the contract value, the indemnifying party's liability cannot exceed 10% of the total contract's value. By incorporating these indemnity provisions effectively, Oregon parties can allocate risks and liabilities appropriately, ensuring financial protection for all involved. It is important to consult with legal professionals when drafting or reviewing indemnity provisions to ensure compliance with Oregon state laws and effectively manage dollar exposure.
