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Why NY Does Not Allow Contractual Indemnity for Intentional Acts

 

Much to the chagrin of the more powerful side to a contract, there are limitations on what you can obligate the other side to cover (or, in legalese, "indemnify") should things go south.

 

Perhaps the most glaring example is requiring the other side to indemnify you for your intentional bad acts that results in foreseeable harm.

 

"Why aren't the parties free to enter into whatever agreement they want?" you ask.

 

The answer is that such an agreement directly contravenes a strong public policy that disfavors giving anyone free reign to behave inappropriately on someone else's tab.

 

As the New York Court of Appeals has explained:

"One who intentionally injures another may not be indemnified for any civil liability thus incurred. However, one whose intentional act causes an unintended injury may be so indemnified….This is so because to allow such indemnity would be to violate the "fundamental principle that no one shall be permitted to take advantage of his own wrong". Pub. Serv. Mid. Ins, v. Goldfarb, 425 N.E.2d 810, 814 (N.Y. 1981)

 

"Thus, whether a contract explicitly or implicitly requires indemnification for intentional torts, that provision is unenforceable. An agreement between two private parties, no matter how explicit, cannot change the public policy of this State. Id. (holding that insured could not be indemnified against punitive damages because "[s]uch damages are, as the name implies, a punishment for intentional wrongdoing")."