Duty to Defend
• Often linked with Indemnification
• Duty to defend kicks in when event occurs
• Who controls defense
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Third-Party Claims
Requirement to Give Notice
• The Indemnified Party shall give the Indemnifying Party reasonably
prompt written notice thereof, but in any event not later than 30 calendar
days after receipt of such notice of such Third Party Claim. The failure to
give such prompt written notice shall not, however, relieve the
Indemnifying Party of its indemnification obligations, except and only to
the extent that the Indemnifying Party forfeits rights or defenses by
reason of such failure. Such notice by the Indemnified Party shall describe
the Third Party Claim in reasonable detail, shall include copies of all
material written evidence thereof and shall indicate the estimated amount,
if reasonably practicable, of the Loss that has been or may be sustained by
the Indemnified Party.
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Third-Party Claims (continued)
Control of Litigation by Indemnifying Party
• The Indemnifying Party shall have the right to participate in, or by giving
written notice to the Indemnified Party, to assume the defense of any Third
Party Claim at the Indemnifying Party's expense and by the Indemnifying
Party's own counsel, and the Indemnified Party shall cooperate in good
faith in such defense. In the event that the Indemnifying Party assumes the
defense of any Third Party Claim, it shall have the right to take such action
as it deems necessary to avoid, dispute, defend, appeal or make
counterclaims pertaining to any such Third Party Claim in the name and on
behalf of the Indemnified Party.
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Third-Party Claims (continued)
Indemnified Party’s Right to Participate or Have Separate Counsel
• The Indemnified Party shall have the right to participate in the defense of
any Third Party Claim with counsel selected by it subject to the
Indemnifying Party's right to control the defense thereof. The fees and
disbursements of such counsel shall be at the expense of the Indemnified
Party, provided, that if in the reasonable opinion of counsel to the
Indemnified Party, (A) there are legal defenses available to an Indemnified
Party that are different from or additional to those available to the
Indemnifying Party; or (B) there exists a conflict of interest between the
Indemnifying Party and the Indemnified Party that cannot be waived, the
Indemnifying Party shall be liable for the reasonable fees and expenses of
counsel to the Indemnified Party in each jurisdiction for which the
Indemnified Party determines counsel is required.
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Third-Party Claims (continued)
Right to Settle
•
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Notwithstanding any other provision of this Agreement, the Indemnifying Party shall not
enter into settlement of any Third Party Claim without the prior written consent of the
Indemnified Party. If a firm offer is made to settle a Third Party Claim without leading to
liability or the creation of a financial or other obligation on the part of the Indemnified Party
and provides, in customary form, for the unconditional release of each Indemnified Party
from all liabilities and obligations in connection with such Third Party Claim and the
Indemnifying Party desires to accept and agree to such offer, the Indemnifying Party shall
give written notice to that effect to the Indemnified Party. If the Indemnified Party fails to
consent to such firm offer within ten days after its receipt of such notice, the Indemnified
Party may continue to contest or defend such Third Party Claim and in such event, the
maximum liability of the Indemnifying Party as to such Third Party Claim shall not exceed
the amount of such settlement offer. If the Indemnified Party fails to consent to such firm
offer and also fails to assume defense of such Third Party Claim, the Indemnifying Party may
settle the Third Party Claim upon the terms set forth in such firm offer to settle such Third
Party Claim. If the Indemnified Party has assumed the defense, it shall not agree to any
settlement without the written consent of the Indemnifying Party (which consent shall not be
unreasonably withheld or delayed).
Third-Party Claims (continued)
Simple Duty to Defend
•
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The indemnification obligations in this section are conditioned upon: (a) written notice by the
indemnified party to the indemnifying party within 30 days of the indemnified party’s receipt
of any Claim for which indemnification is sought; (b) counsel for the indemnified party
reasonably acceptable to the indemnifying party; (c) approval by the indemnifying party of
any settlement of the Claim for which indemnification is sought; and (d) such reasonable
cooperation by the indemnified party in the defense as the indemnifying party may request.
Notwithstanding anything to the contrary contained herein, the indemnifying party shall not,
without the prior written consent of the indemnified party, settle, compromise or consent to
the entry of any judgment with respect to any pending or threatened Claim unless the
settlement, compromise or consent provides for and includes an express, unconditional
release of such Claim against the indemnified party.
Insurance
• Insurance provisions move the burden of claim handling and
defense of third- party claims to a fourth party, a commercial
insurance company.
• Drafters should specify insurance insurance coverages
required.
• Importance of becoming an “Additional Insured”.
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Insurance (continued)
• Supplier Insurance Coverage: Supplier shall,
throughout the term of this agreement and any
extensions thereof, and for a period of 24 months
following expiry or termination of this agreement,
take out and keep in full force and effect at its sole
cost and expense, the following insurance coverage,
required in connection with the services and/or
products provided by Supplier, its employees and
agents, and anyone working on behalf of the Supplier.
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Insurance (continued)
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•
Comprehensive General Liability insurance, including but not limited to, liability
for property damage, bodily injury (including death), personal or advertising injury,
employers’ liability, contractual liability, and non-owned automobile liability.
Coverage must be occurrence based, and provide limits of not less than five million
dollars ($5,000,000) in the aggregate, which can be satisfied through the use of
primary and umbrella liability policies. Such policies shall have a cross liability
and severability of interest clause, and shall include Customer as an additional
insured;
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Automobile Liability insurance for owned, leased, non-owned and/or hired
automobiles with a combined single limit of five million dollars ($5,000,000),
which can be satisfied through the use of primary and umbrella liability polices.
Such coverage shall include Customer as additional insured;
Insurance (continued)
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•
Workers Compensation insurance as required under applicable State legislation,
including employers’ liability with a limit of not less than required under
Applicable Law;
•
All Risk Property Damage, Business Interruption and Extra Expense insurance
upon property owned by Supplier, or for which Supplier is legally liable, or
installed by or on behalf of Supplier in its premises, or in the care, custody or
control of Supplier without limitation, in an amount of not less than the full
replacement cost thereof, and any resultant loss of earning or profits or extra
expense incurred. Such coverage shall insure at least against fire and such other
perils as are included in the standard “all-risks” coverage including, without
limitation, sprinkler leakage where applicable, flood and collapse Customer shall
be names as first loss payee with respect to Customer property in the care, custody,
and control of the Supplier if any;
Insurance (continued)
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•
Errors and Omissions liability insurance covering liability for financial loss (a) arising out of an error,
omission or negligent act in the rendering of Services by Supplier, its employees, or agents, (b) imposed by
Law or assumed under contract arising out of an error, omission or negligent act by Supplier its employees,
or agents in the rendering or failure to render technology services to others for a fee, or the failure of
Supplier’s technology products to perform the function or serve the purpose intended, and (c) imposed by
Law or assumed under contract for the failure or breach of network security, failure to safeguard against
breach caused by hacking or viruses, unauthorized release of and/or failure to protect private personal or
corporate information, theft of hardware on which data is stored, and costs to restore and/or recreate lost
data (i.e. network/cyber security). Such insurance shall be in an amount of not less than five million dollars
($5,000,000) in the aggregate, shall be on a claims made basis and provide for full defense costs;
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Fidelity bond/employee crime policy on a commercial form in an amount not less than one million dollars
($1,000,000) and providing coverage for: (a) dishonest, fraudulent or malicious acts of any employee or
agent of Supplier wherever committed; (b) coverage for malicious damage or destruction of or malicious
damage to property, electronic data or electronic data processing media arising from misappropriation,
conversion or any dishonest act by any employee or agent of Supplier or by any person for whom Supplier
is responsible under this agreement or at law; and (c) electronic and computer theft;
Insurance (continued)
• Supplier shall, in addition to insurance premiums, pay all deductibles and/or
self-insured retentions for claims applicable to any insurance required herein.
• Supplier shall, upon execution of this Agreement, annually upon renewal of
each insurance coverage referred to in this Agreement, and at any extensions to
the Term of this Agreement, provide Customer with certificates of insurance
for all insurance required in this Agreement, and which shall confirm Customer
is named as Additional Insured with respect to Commercial General Liability
and Automobile Liability insurance, and as First Loss payee with respect to
property insurance.
• For greater certainty Supplier shall at all times during the Term of this
Agreement, and any extensions thereof, maintain at a minimum the required
types and limits of insurance with carriers that maintain an S&P rating of A or
better.
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Insurance (continued)
• Supplier or Supplier’s insurer or insurance broker shall provide 30 days written
notice to Customer of any cancellation, termination or material change to the
insurance required herein.
• Additionally, each of the insurance policies referred to in this Article are
primary and without any right of contribution by Customer or any insurance
effected by Customer to the extent of its rights as additional insured or loss
payee as the case may be.
• The insurance required herein shall cover Supplier, and any contractors or
subcontractors hired by Supplier to perform any work relating to this
agreement, or in the alternative Supplier shall require and verify that all
contractors or subcontractors hired to perform any work relating to this
Agreement shall maintain all insurance coverage and limits specified in this
Agreement, and shall require that all contractors or subcontractors provide
certificates of insurance as evidence of such insurance, which certificates shall
be provided to Customer.
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Q&A
• Panelists
• Alan M. Block, Vice President and Counsel, John Hancock Financial Services
ablock@jhancock.com
T: 617.572.9694
• Andrew W. Feinberg, Chief Legal Officer and Executive Vice President, Brightcove Inc.
afeinberg@brightcove.com
T: 617.500.4932
•
Robert D. Friedman, Partner and Co-Chairman of Business Litigation Group, Burns & Levinson
LLP
rfriedman@burnslev.com
T: 617.345.3248
• Josef B. Volman, Partner and Co-Chairman of Business Law Group, Burns & Levinson LLP
jvolman@burnslev.com
T: 617.345.3895
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