Mujtaba Ahmed Qadri Student ID: 20151-19542

Business & Corporate Law Asignment

" Indemnity Contract "

A contract where one party promises to save the other from any loss caused to him by
the conduct of promissor himself or any other person is called contract of indemnity,

Indemnity contract includes two parties namely; Indemnifier and Indemnity holder.
The person who is promising to pay compensation is called Indemnifier and the
person who`s loss is compensated is called Indemnity holder.

Example: There is a contract between X and Y according to which X has to Sell a tape
recorder (which is selected) to Y after three months. On the next day of their contract
Z has come to X and has insisted on selling the same tape recorder to him (Z). Here Z
is promising to compensate X for any loss faced by X, due to selling the tape recorder
to Z. X has agreed. Now the contract which has got formed between X and Z is called
indemnity contract, where Z is indemnifier and X is indemnity holder.

" Cases involving Indemnity contract "

Case 1:
NSW Arabian Horse Association Inc v Olympic Coordination Authority

Facts:
The Olympic Coordination Authority (the authority) had the management, care
and control of the Sydney International Equestrian Centre (SIEC) and car park,
located at Horsely Park, New South Wales. The authority entered into a written
agreement with the New South Wales Arabian Horse Association Inc (the
association), whereby the association as the event organiser acquired rights to use
the SIEC for the purposes of staging an event known as the East Coast Arabian
Championships 2001 (the contract).
A husband and wife, who had attended at the SIEC for the championships, made
their way back to their parked car via a lit pathway at approximately 9.30pm. Before
they reached their car, they fell into a drainage culvert adjacent to the car park and
sustained injuries. They both commenced proceedings against the authority for
personal injuries. The authority brought a cross-claim against the association.
Clause 6 of the contract required the association to take out public liability
insurance for the Event for no less than $10m and the authority was to be named
on this policy as an interested party. The association took out a policy that
included a hand written note naming the Sydney International Equestrian Park as
a co-insured, which was clearly not the name of the authority.
The authority settled both claims brought by the husband and wife for $70,000 and
$39,500 respectively. The cross claim by the authority against the association for
breach of Clause 6 of the contract proceeded to a hearing.
Mujtaba Ahmed Qadri Student ID: 20151-19542

Trial Decision:
The trial judge found in favour of the authority and held that the association was in
breach of its obligation to take out public liability insurance as required by Clause 6
of the contract. Damages for the breach were quantified as the amount claimed
against the authority by the two individuals who were injured. The association
appealed the decision.

Appeal Decision:
The association argued that Clause 6 should be read and confined by Clause 22 of
the contract. Clause 22 provided that the association, as the event organiser,
indemnified and released the authority from all liability, except to the extent that
such liability resulted from the negligence of the authority.
The association submitted that Clause 22 confined Clause 6 to insurance in respect
of those liabilities that arise out of the indemnity in Clause 22 but not otherwise.
The Court of Appeal did not accept that Clause 6 was to be read and confined by
Clause 22 and held that such a construction was untenable. Instead, the Court of
Appeal found that the purpose of Clause 6 was to ensure the authority had
insurance cover where Clause 22 did not provide indemnity, that is, when liability
arose from the authoritys own negligence.
The Court of Appeal interpreted the words in Clause 6 that the authority is to be
named on the policy as an interested party to mean that the authority was to be
named in the policy as a person to whom the insurance cover provided by the
contract extends as per section 48 of the Insurance Contracts Act 1984 (Cth).
The association also argued that the expression for the Event in Clause 6 should
be confined to the actual event, namely the equestrian activities at Horsely Park,
and not extend to accidents which occurred in the area between the arena and the
carpark. This argument was dismissed by the Court of Appeal, which, in accepting
that the word for may be treated as an equivalent to the expression in respect
of, found those words were capable in an appropriate context of having the widest
possible meaning. The Court of Appeal found that parking was an integral part of
the event as parking requirements were provided for in the event application form
and there was provision for the association to receive 40% of the parking revenue
from the event. Accordingly, the Court of Appeal held the Event extended to the
parking area and the area between the parking area and the arena, including the
path from where the husband and wife fell. The Court of Appeal upheld the trial
judges finding that the association had breached Clause 6 of the contract in failing
to take out insurance cover for the authority and dismissed the appeal brought by
the association in full and awarded costs on an indemnity basis.

Case 2:
Samways v WorkCover Queensland & Ors [2010] QSC 127

Facts
Mr Samways was a construction worker employed by the first defendant. The first
defendant was contracted to work on a site controlled by De Luca. De Luca had
contracted with Lynsha to supply it with a bobcat and operator to work on the site.
On 6 December 2005, Samways was injured when he walked into the raised bucket
of the bobcat. The bobcat bucket had been raised in order to allow Lynsha to effect
some repairs the afternoon before. The repairs had been completed prior to the
Mujtaba Ahmed Qadri Student ID: 20151-19542

incident occurring but the bobcat had not been moved and was left near an area
where Samways was working.
Samways supervisor had given a verbal warning to him and his co-worker to watch
out for the bucket of the bobcat and he notified De Lucas site supervisor that the
bobcat was close to their work area. The De Luca supervisor responded by saying
that he didnt have the keys to move the bobcat (they were with the bobcat
operator).
Samways made a claim for damages for negligence against:
His employer - WorkCover (first defendant)
The occupier of the site De Luca
The supplier of the bobcat and its operator Lynsha

Decision
All defendants were found to be negligent, while Samways was found to be
contributory negligent, which resulted in a reduction in damages of 20%. Liability
was apportioned:
WorkCover 10%.
De Luca 30%.
Lynsha 60%.
Lynsha then sought an indemnity from De Luca pursuant to the contract between
them. The contract contained the following indemnity clause:
[De Luca] shall fully and completely indemnify [Lynsha] in respect of all claims by
any person or party whatsoever for injury to any person or persons and/or property
caused by or in connection with or arising out of the use of the plant and in respect
of all costs and charges in connection therewith whether arising under statute or
common law.
The Court held that the indemnity operated so that Lynsha was entitled to be
indemnified by De Luca for all claims, including its own negligence.
It confirmed that the words arising out of and in connection with are of wide
meaning, the former indicating a weak, but not remote, causal relationship. In this
instance, the causal relationship must be between the injury and the use of the
bobcat. The court found that the word use is not ambiguous and could not be
construed to mean that it was being driven or operated at the time. It was sufficient
that the bobcat was in an operational condition, having been parked with a view to
being deployed on tasks at the direction of the second defendant at the time the
accident occurred.
As a result, De Luca was required to indemnify Lynsha. The final apportionment and
orders to pay damages was:
WorkCover 10%
De Luca 90%
Lynsha 0% (due to contractual indemnity in its favour)

Case3:
GIO General Limited v Centennial Newstan Pty Ltd [2014] NSWCA 13

Facts
Centennial Newstan Pty Ltd (Centennial) operated a coal mine near Newcastle.
Centennial entered into an agreement with Longwall Advantage Pty Ltd
Mujtaba Ahmed Qadri Student ID: 20151-19542

(Advantage) for the supply of labour from Advantage to Centennial to perform

work at Centennials mine site (the agreement). Relevantly, the agreement
included the following clauses:
Clause 8.1 provided that Advantage was obligated to indemnify Centennial for all
claims for:
(a) injury to or death of any of your personnel, except to the extent that a claim
for such injury or death arises as a result of the negligence of Centennial or a
breach of this contract by Centennial;
(b) injury to or death of any person (including employees, agents or
subcontractors of Centennial)... caused by an negligent act or omission by
You or Your Personnel or a breach of this Contract by You.
Clause 8.3:
You and your Personnel must maintain workers compensation insurance as required
by applicable Laws and public liability and (unless agreed otherwise by Centennial
in writing) professional indemnity in accordance with ... Clause 8.4, together with
any other insurance specified on the Purchase Order. If requested by Centennial at
any time, You must provide such evidence as Centennial reasonably requires that
You or Your Personnel are insured in accordance with this Contract.
Clause 43 of the Site Regulations provided:
43.1 The Contractor must have insurances referred to in the Contract whenever
performing its obligations under the Contract and for the period (if any) set out in
the Contract after the Contractor has performed all of its obligations under the
Contract.
43.2 Special insurance requirements
43.2.2 Unless otherwise agreed in writing by the Principal, public and product
liability policies not the Principal and all subcontractors asinterested parties and
must cover the respective liabilities of each of those parties to each other and to
third parties. The policy must cover each indemnified party to the same extent as it
would if each of the parties had a separate policy of insurance.
43.4 Failure to insure
If the contractor neglects, fails or refuses to obtain any insurance policies as
required by the Contract or the Standard Contractors Site Regulations the
Contractor must indemnify the Principal for any loss or damage suffered by the
Principal arising out of or in connection with the Contractors failure to obtain the
required insurance.
Advantage maintained a policy of insurance (the policy) with GIO General Limited
(GIO). One of the workers supplied by Advantage was Mr McDonald, who was
employed by Longwall Labourforce Pty Ltd (Labourforce).
Mr McDonald was injured when his leg was crushed while working as a fitter and
turner at Centennials coal mine. He bought an action for damages for personal
injuries against Labourforce, Advantage and Centennial. Subsequently, Centennial
sought indemnity from GIO, claiming indemnity under the policy.

Trial Decision
The trial judge found that Labourforce, Advantage and Centennial were all liable for
Mr McDonalds injuries. For the purposes of contribution, it was found that
Centennial was to bear 100% of the liability and damages in the sum of $550,000
(less workers compensation payments). The trial judge held that GIO was liable to
indemnify Centennial in respect of its liability to Mr McDonald. GIO appealed this
decision.
Mujtaba Ahmed Qadri Student ID: 20151-19542

Appeal Decision
The primary question on appeal was whether Advantage was required by Clause
43.2.2 to provide insurance cover to indemnify Centennial against its liability for its
own negligence. The Court of Appeal unanimously dismissed the appeal and agreed
with the trial judge that Centennial was entitled to be indemnified by GIO pursuant
to the policy.
The Court of Appeal found that when the agreement was read as a whole, it may be
seen that the scheme of its provisions in relation to insurance and indemnity were
as follows:
Under Clause 8.3, Advantage covenanted that it and Your Personnel (its
employees, agents and subcontractors) would maintain workers
compensation insurance and public liability insurance in accordance with
Clause 8.4 (which set out the minimum insurance requirements)
Clause 43.1 reinforced Clauses 8.3 and 8.4 by requiring that Advantage must
have the insurance referred to in the contract whenever performing its
obligations under the Contract
Under Clause 43.2.2, Advantage was obliged to ensure that the policy noted
that Centennial and all subcontractors were interested parties and that the
policy covered their own interests in the terms specified
The cover was for the respective liabilities of each of those parties to each
other and to third parties. Those parties is a reference to the interested
parties under the policy and this included Centennial.
Under Clause 43.4, Advantage was obliged to indemnify Centennial if it failed
to obtain the required insurance policies. This indemnity was in addition to
the indemnity in Clause 8.1.
GIO had argued that the insurance clause in the agreement was to be construed in
the same manner as it was in the case Erect Safe Scaffolding v Sutton, which held
that a subcontractor will not be required to maintain insurance against loss
occasioned by the head contractors negligence.
The Court of Appeal distinguished this case from Erect Safe, finding that the terms
of the agreement here were quite different:
The indemnities under Clause 8.1 were clear.
Clauses 8.1, 8.3 and 8.4 were supplemented by the special insurance
requirement and indemnity clause in the Site Regulations and these
provisions must be read together, and where possible, in a harmonious
manner
The insurance clause in Erect Safe only covered against the respective rights
and interests of the head contractor and the subcontractor against liability
death or injury to any person in the context of the contractual indemnity
given by the subcontractor to the head contractor arising out of the
performance of the works. In contrast, in this case the special insurance
requirements were intended to provide cover to Centennial beyond the scope
of the indemnity under Clause 8.1
The construction of Clause 43.2.2 (that the insurance clause does more than
merely secure the indemnity in Clause 8.1) is supported by evidence of the
separate indemnity in Clause 43.4. Clause 43.4 would have no work to do if
the clause relating to obligation to obtain insurance cover for Centennial
merely secured the indemnity afforded by Advantage to Centennial under
Mujtaba Ahmed Qadri Student ID: 20151-19542

Clause 8.1
It was concluded that Erect Safe was not determinative of the construction to be
given to Clause 43.2.2. The appeal was dismissed.

Case 4:

The defendant in Texas retained the plaintiff in New York to prosecute a claim on a
contingent fee basis. The claim was for $144,ooo, and the fee was to be twenty-five
per cent of the amount recovered. While that suit was pending the now defendant
attempted a compromise through a local attorney and telegraphed plaintiff, "must
know immediately what will be your fee in the event we accept settlement offered
us. Answer quick." Plaintiff specified $12,500 immediately; defendant made no
reply. Four months later the local attorney informed the plaintiff that the
compromise had been effected (cash $50,000, securities $94,ooo, note $66,ooo),
whereupon plaintiff had the pending suit dismissed. In defence of this suit for
$12,500, it was asserted that since there was no reply to plaintiff's offer to receive
that much in settlement, the offer was never accepted. Both sides moved for a
directed verdict. Held, that plaintiff recover $12,5oo. Laredo National Bank v.
Gordon, 6i F. (2d) 906 (C.C.A. 5th 1932), certiorari pending. The majority of
jurisdictions hold that the client must respond in damages for the dismissal without
cause of the attorney employed for a specific purpose or period. New York dissents
as to employment for a specific purpose and holds the attorney may recover only
quantum ineruit for his services. Marlin v. Camp, 219 N.Y. 170, 114 N.E. 46, L.R.A.
917F, 402 (1916), and cases cited therein; Greenberg v. Remick 6- Co. 230 N.Y. 70,
129 N.E. 211 (1920). Orthodox notions of contract support the majority view, while
the minority ruling rests on a matter of policy predicated upon the relation of the
parties and the desire to avoid litigation by permitting compromises. Whether the
client has the "privilege" or only a "power" to dismiss the attorney without cause,
there is no reason why the parties cannot mutually rescind the original contract,
contingent upon a successful compromise, and agree upon a definite compensation
for the attorney. The court in the principal case decided that the defendant's failure
to reply to the plaintiff's telegram constituted the acceptance of an offer looking to
such an agreement. Though generally mere silence will create no contractual
obligation, "it is at least clear as a matter of law that silence and total inaction of
the defendant may operate as assent to the formation of the contract." Williston,
Contracts (1920), 168, 91. See also Contracts Restatement (1932), 72. It should
be determined from the particular facts of each case whether it has so operated or
not. There are several facts in this case which justify the court's holding. First, the
fee set by the attorney was undoubtedly very fair, considering the amount obtained
in the settlement and, deducing from that, what the plaintiff might have got had he
prosecuted the suit to recovery. Second, the very terms of the telegram would seem
to justify the plaintiff in believing, reasonably, that if defendant was not satisfied
with the compensation specified he would object within a reasonable length of time.
Mujtaba Ahmed Qadri Student ID: 20151-19542

Contracts Restatement (1932), 72c. Third, the attorney-client relation existing

between the parties