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Cross Indemnity Agreement

Cross-Indemnity Agreement

Definition

A form of indemnity that is often used in energy industry and chemical industry contracts. Under cross-indemnity agreements, the indemnification obligation is reciprocal in nature, regardless of fault. Therefore, each party obligates itself to indemnify the other for liabilities arising out of each other's acts or omissions.
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Related Terms

Indemnity Contract

An agreement to pay on behalf of another party under specified circumstances. An insurance policy is an indemnity contract.

Knock-for-Knock Indemnity

A form of indemnity that is used in energy industry contracts. Knock-for-knock indemnity is reciprocal in nature and is based on ownership of property and personnel as opposed to allocating risk based on fault. Each party to an oil and gas contract agrees to take responsibility for and to indemnify the other party against injury and loss to its own property and personnel.

Indemnification

(1) In policies written on an indemnification basis, the insurer reimburses the insured for claims and claim costs already paid by the insured. Technically, the insured must not only suffer a loss but must also pay the loss before being indemnified by the insurer. (2) The agreement of one party to assume financial responsibility for the liability of another party. Hold harmless agreements are typically used to impose this transfer of risk.

Indemnity

Compensation to a party for a loss or damage that has already occurred, or to guarantee through a contractual clause to repay another party for loss or damage that might occur in the future. The concept of indemnity is based on a contractual agreement made between two parties in which one party (the indemnitor) agrees to pay for potential losses or damages caused by the other party (the indemnitee).

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