Construction Law/consultant liability was proffessional indemnity insurance."
In one of our tender one consultant request for "Consultant liability to Client is limited to the consultancy contract value"Please comment.To my knowledge consultant liability was proffessional indemnity insurance."
Consultantís having agreements with their employers may cover a risk more than value of their contract. In general terms, indemnity clauses in consultants contracts provide that the
consultant will indemnify or hold harmless his client against certain liabilities as set out in the indemnity. The precise wording is important. The indemnity may be widely drawn to cover all losses suffered, or may be restricted to losses such as those related to death or personal injury, property damage or infringement of intellectual property rights. Typically the effect of an indemnity is to make the consultant liable for damages over and above those recoverable at common law.
An indemnity appears safe for employers and well drafted an indemnity clause can mean that a consultant is contractually bound to recompense the client for all the losses it has suffered to a much greater extent than the damages recoverable under the common law for breach of contract.
Generally, a client pursuing a claim against its consultant may rely on him having
professional indemnity insurance. However, the consultantís professional indemnity policy may not cover all damages claimed under an indemnity, it may be limited to negligent acts only or may expressly exclude cover for indemnities. Therefore, it is difficult to establish a limit on indemnity for consultancy contract and instead of this limit, consultants need to have better negotiated Professional Indemnity coverage. I do not think that the Employer take this risk and provide relaxation.