What is a cap and basket indemnification?

An indemnification 'cap' limits the overall liability of the seller to some dollar amount and an indemnification 'basket' establishes a threshold under which the buyer cannot make a claim against the seller.

What is a basket claim?

The basket concept establishes a threshold for the indemnification, which means that claims would not be payable unless the threshold, or "basket," is exceeded. The "first dollar" method usually applies to baskets. This means that if there is a basket of $250,000, any claims up to $250,000 would not be paid.

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Indemnity Provisions - Dollar Exposure of the Indemnity regarding...

Tarrant Texas Indemnity Provisions - Dollar Exposure of the Indemnity regarding Baskets, Caps, and Ceilings

Name: Tarrant Texas Indemnity Provisions - Dollar Exposure of the Indemnity regarding Baskets, Caps, and Ceilings
Brand: US Legal Forms
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Category:

Contracts - Clauses - Indemnification

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Multi-State

County:

Tarrant

Control #:

US-ND1010

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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.

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The aggregate Losses of the Seller Indemnifying Parties, pursuant to Section 7.02(a), shall not exceed one million dollars ($1,000,000) (the Indemnity Cap), other than with respect to Losses arising out of (a) fraud or willful misconduct or (b) breaches of any Fundamental Representations.

This is essentially an I'll protect your back clause, making the party giving the indemnity responsible to pay back the other party for things they might do wrong, bringing harm to the first party. You may also know that most contracts also include a separate limitation on liability clause.

A basket (sometimes called a deductible) is a threshold amount of losses and damages that a buyer must incur before it is entitled to any indemnification from the seller.

Caps and baskets are types of limitations on the Buyer's ability to recover from the Seller for certain losses, even when the Seller has breached its representations and warranties under the acquisition agreement.

Per GF Data Spring 2019 Report, the average deal indemnification cap for non-fundamental reps and warranties as a percentage of enterprise value was 15.0% in 2018, an increase from 12.2% in 2017.

An indemnification 'cap' limits the overall liability of the seller to some dollar amount and an indemnification 'basket' establishes a threshold under which the buyer cannot make a claim against the seller.

These are damages directly between the two parties to the agreement. As mentioned above, this makes sense to be capped. As between the two parties themselves directly, the value of the deal should be in line with the amount of risk.

The basket concept establishes a threshold for the indemnification, which means that claims would not be payable unless the threshold, or "basket," is exceeded. The "first dollar" method usually applies to baskets. This means that if there is a basket of $250,000, any claims up to $250,000 would not be paid.

Indemnification basket refers to the amount that damages or losses must exceed before a seller is liable for any indemnification payments. An indemnity basket requires the buyer to incur a certain amount of loss before it can seek indemnification from the seller.

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In note 9 to the Group's consolidated financial statements on page 198. As provided in the Agreement and Declaration of Trust.An equivalent clause may be acceptable in the discretion of the City. 2. Limitation on Liability; Indemnification, 470. Enforcement of Mortgage Loan Seller's Obligations Under the MLPA, 473.

Tarrant Texas Indemnity Provisions - Dollar Exposure of the Indemnity regarding Baskets, Caps, and Ceilings

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