The contract reads: "PartyA agrees to indemnify and hold
PartyB free and harmless from any and all claims, charges,
demands and suits of every kind and nature whatsoever arising
out of any action taken by third parties".
As I understand that clause, it means that 3rd-parties cannot
include PartyB in any lawsuit. Right?
I think this is wrong. It means that PartyA *PAYS THE BILL*.
It may mean that PartyA provides the lawyer, too.
Is that really enforceable?
I think the contract CAN make PartyA pay the bill, provided
PartyA's pockets are deep enough.
I can understand how a contract can control the behavior
of parties to the contract -- for example, indemnify PartyB
from lawsuits by PartyA under specified conditions.
But I did not think that a contract can limit the actions
of people who are not party to the contract. For example,
It can't. Someone may come up with an exception where there is a
network of contracts, like manufacturer <--> distributor, distributor
<--> retailer, retailer <--> customer, where the manufacturer's
contract requires the distributor to require the retailer to provide
certain types of support to the customer, or some such thing.
if PartyB has the deeper pockets, the clause above would
enjoin a 3rd-party from being to sue deeper pockets, as I
understand it. That seems odd.
Anyway, I would be happy to hear that the clause is
enforceable as I understand it. I'm related to PartyB :-).
An interesting situation occurs when PartyA has deeper pockets.
Can the third party get more money than PartyB *HAS*, which PartyA
has to reimburse? Or is the recovery limited to what assets PartyB
has?
Gordon L. Burditt
