Knock for Knock Indemnities: Contract Practices and Enforceability Issues
Published 24 March 2011
Oil and gas and construction projects are risky ventures. Injuries to personnel and severe damage to property may result in exorbitant losses to be borne by the project participants. It is in this context that the contractual allocation of liabilities between the project parties becomes an issue of paramount importance. Nowadays, it is generally accepted both by the oil and gas and construction industries that knock for knock indemnities represent an efficient model of liability distribution for construction contracts and oilfield services agreements. This paper will (i) describe the main features of the knock for knock regime and its operation within construction and oil and gas projects; (i) identify the inconsistencies between knock for knock provisions and other typical liability clauses included in oilfield services and construction agreements; and (iii) analyze the major constraints to the enforceability of knock for knock provisions under English and Texas laws. Guidelines to resolve the problems identified will also be suggested where appropriate.
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