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If the indemnifier is not a natural person, only the situation relating to third party claims can arise.
This was tantamount to an exclusion of the liability otherwise owed by the indemnitee to the indemnifier in respect of the indemnitee's negligence.
Their effect was to cause the indemnifier to suffer the loss or damage caused by the indemnitee's negligence towards the indemnifier.
First, if the indemnifier is a consumer, then s 4 (which regulates all indemnities granted by consumers, whoever the indemnitee) subjects the clause to the test of reasonableness.
An indemnifier, however, can be liable when the customer has a valid defence and can sometimes be liable to a greater extent than the customer (see Goulston Discount Co.
However, where the indemnifier grants an indemnity to the indemnitee (under a contract between them) in respect of third party claims made against the indemnitee by reason of the indemnitee's own negligence, different considerations arise.
Phillips Products Ltd v Hyland [1978]2 All ER 620 solved the problem in respect of all such counter-indemnities, where the loss or damage was suffered personally by the indemnifier, whether or not a consumer.
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The only other type of clause which operates to shift liability is a counter-indemnity whereby the innocent party ( "indemnifier" ) indemnifies the party in default ( "indemnitee" ) for any claim made in respect of death or personal injury caused by the indemnitee's own negligence.
If the indemnifier is a natural person, the death or personal injury in question could either be suffered by the indemnifier himself, or by a third party who has suffered it by reason of the indemnitee's negligence and is claiming against the indemnitee in tort.
The situation is otherwise where there is an underlying liability owed by the indemnitee to the indemnifier, so that in the absence of the indemnity the indemnitee would be legally obliged to compensate the indemnifier for the economic loss suffered as a result of the third party claim.
In the case of an indemnifier who is not a consumer, the question to be asked is whether, in the absence of the indemnity, the indemnitee would have been obliged at common law to compensate the indemnifier for the economic loss suffered as a result of having to pay out on the third party claim.