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Contract indemnity clauses

1 Jan 2016

When signing or renewing a contract with any organisation, check your indemnity clause carefully. As a Medical Protection member you have access to medical indemnity cover for your own professional protection. However, your membership does not extend to provide indemnity for a third party.

The problem

Your contract may contain a clause such as the one quoted here:

You accept liability, and will reimburse the practice, for any loss, expense, damages or compensation which the practice incurs or is required to pay (including without limitation any legal fees or amount paid by way of settlement) in relation to any claim, which is threatened, notified or commenced against the practice and which:

(a) arises directly or indirectly out of any act or omission by you in the course of your employment; and
(b) alleges a breach of any duty owed by the practice or you in contract or tort.

Your Medical Protection membership does not normally extend to cover for this kind of liability. However, if you did agree to such a clause, you personally would be committed to honouring that part of the contract.

The solution

Discuss the situation with the contracting organisation and try to negotiate a change in the contract by removing the clause and substituting an alternative, such as the one given below.

The doctor (contractor or employee) will, during the term of this agreement, have and maintain professional liability cover from a recognised medical defence organisation or insurer. The doctor (contractor or employee) will, on request, provide evidence of his or her defence organisation membership or insurance cover.

If you are unable to reach an agreement, do not sign without contacting Medical Protection for further advice.

Medical Protection may be able to discuss this with the organisation or company. In our experience, nearly all have agreed with the above clause or to something very similar. However, where the organisation will not change the wording the options open to the contractor are: to obtain third party cover from a commercial insurer;  not accept the contract offer; or accept the contract at his or her own risk.

Remember – contracts are legally binding, and if you have any concerns about the indemnity clause of the contract you are about to sign, contact Medical Protection.

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