In the world of leasing and financing equipment, prudent lenders launch a very broad network when describing the types of receivables for which their underwriters must pay compensation. Indeed, it is generally common in the industry to start with a full compensation clause and focus negotiations on exceptions. As an owner`s advice, this author continued to consider that these exceptions should be few and far between. In the end, the lessor is only a source of money, and a broad discount, consistent with the idea of a net triple leasing, is a fundamental basis of his good business. The obligation to compensate is different from the duty of defence. The duty of defence involves the obligation to hire a lawyer and to bear the costs and expenses associated with the legal defence of an alleged claim within the scope of the compensation clause. The distinction is particularly important when a claim has no value or it is not clear whether a right is founded and the right must be challenged. The duty of defence requires the party to compensate the other party, often referred to as the beneficiary of compensation or a party for compensation, to pay for a legal defence, even if a court ultimately finds that the right has no value. As a general rule, equipment leasing associates a compensation clause with a defence clause, z.B.
the taker [the compensated parties] must defend, compensate and maintain. If the contract provides for compensation for direct rights (see above), the parties may explicitly state that the defence obligation applies only to third-party rights, so that in the event of a dispute between the two parties, it would not be mandatory to bear the legal costs of the other in this dispute. Consider, for example, the mcNally – Nimergood v. Neumann – Kiewit Constructors, Inc.,1 where McNally – Nimergood (Lessor) leased a crane from Neumann – Kiewit Constructors (Lessee), under a lease agreement requiring the tenant to maintain the crane in perfect condition and repair it if necessary. When a tenant`s employee was seriously injured by the crane, the employee sued both the tenant and the landlord for negligence.