Our legal system aims to compensate an injured party for losses incurred while simultaneously disciplining the wrongful party for causing such harm by its improper actions or failure to act. By virtue of vicarious liability, however, an innocent party may be held liable for injuries caused by another party due to the legal relationship between the innocent party and injured third-party, for example a building owner’s liability to third parties for the acts of its tenants. Frequently, indemnification claims arise from express indemnification agreements, but the right to seek indemnification can also be implied at law despite the absence of an agreement. While these doctrines allow one party to shift a loss to another, they generally are strictly enforced. Recent Commercial Division decisions have provided additional insight into the application of the requirements for seeking common law indemnification.
An express contractual indemnity generally will be enforced according to its terms, except where public policy precludes its enforcement, for example, because of criminal or other highly culpable conduct by the indemnitee. Otherwise, the parties are free to specify in the indemnification clause its scope of coverage, the circumstances under which indemnification is required and the procedures for same. Unlike implied indemnification, express indemnifications are enforceable to indemnify the indemnitee for its own negligence, provided the language of the indemnity supports such a result.