(i) compensation should not relate to “any breach of warranty”. As explained above, a breach of warranty results in a claim for damages and should not be covered by compensation. (a) Consider the nature of the losses covered by the compensation and its extent: (b) exclusion clause – these clauses are intended to exempt the contractor from certain types of liability. These need to be carefully developed, as they may be subject to an adequacy review under the UCTA Contracts Act 1977. (f) Double/Third Party Agreements – A contractor often has to consider the employer`s obligations arising from a superior agreement. Compensation is included to ensure that the employer does not breach its obligations under a higher agreement due to the fault of the contractor. A contractor must carefully consider these provisions, especially where the higher agreement also contains compensation. The end result could be a double exposure. (i) “to the extent that” does not mean “to the extent that” actually means “if” if it is used in compensation. 4.1 Who is the “beneficiary”? Think about whether it is just a company or other third parties, such as a subsidiary. If it is a well-defined concept, a contractor`s exposure is extended by compensation. For example, assignees may also benefit from third-party rights or designated beneficiaries may benefit from them.

If you are doing consulting work for a large company, the company may contain excessively ambiguous language throughout the contract, including the section on compensation. If you have uncertainties about the clause, ask questions and have your lawyer checked before doing anything else. Our advice is that, as far as possible, compensation should be avoided. If such clauses cannot be negotiated on the basis of agreements, we would propose amendments to mitigate their impact, although it is difficult to modify compensation so that it fully reflects the position that the law of the unlawful act would have taken. (iii) Carefully consider the words “procedural costs (calculated on the basis of full compensation)”, as this allows the beneficiary to also cover the costs and expenses related to the application of the agreement (which contains the provision on compensation), such as.B. the construction contract concluded by the contractor. This is a step too far, as courts will usually consider in proceedings how costs are to be borne. . . .