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The presence of an indemnity clause does not answer an important question by itself: are amounts payable under it subject to the liability cap? The answer depends on the full agreement, including the cap, its carve-outs, definitions and governing law.
For illustration only, imagine a SaaS agreement whose clause 12.1 imposes an aggregate cap on liability “whether in contract, tort, under any indemnity or otherwise.” Clause 12.3 then carves out “the indemnity in clause 14.1,” which requires the supplier to cover losses from a third-party claim that the software infringes intellectual property rights. This is a hypothetical clause set. A real contract requires review of the complete wording.
1. Read the cap and carve-outs together
Start with the scope of the cap. Is it aggregate or per claim? Does it cover contract, tort and indemnity liability? Then read the carve-outs. The agreement may expressly exclude a named indemnity, or use broader language that needs interpretation.
2. Pay attention to priority language
Phrases such as subject to may indicate that one provision is subordinated to another, while notwithstanding may signal priority for the provision that follows. These are drafting signals, not substitutes for reading the entire agreement. Placement, related clauses and governing law can affect the analysis.
3. Check the definitions
Review what Losses includes. Does it cover defence costs, legal fees and settlements? Is prior consent required for a settlement? Also check definitions of claim, indirect loss and loss of profits.
4. Separate the cap from exclusions of loss
An agreement may set a monetary cap and separately exclude categories of loss, such as indirect loss or lost profits. Ask whether that exclusion applies to the third-party indemnity and whether the contract expressly connects the provisions.
5. Work out how the cap is calculated
Is the cap per claim or aggregate over the contract term? Is there a higher super-cap for a particular category? How does the wording treat multiple claims arising from the same event?
6. Identify the governing law
If Egyptian law governs, Article 217(2) of the Egyptian Civil Code addresses agreements relieving a debtor from liability for non-performance, subject to the article’s fraud and gross-negligence exceptions. Article 221(2), when assessing contractual damages and absent fraud or gross negligence, concerns limiting compensation to harm that was ordinarily foreseeable at the time of contracting. These provisions do not automatically resolve the validity or scope of every liability cap or contractual indemnity. The clause type, full agreement, facts and applicable current law all matter.
You can consult the Arabic text of Egypt’s Civil Code, Law No. 131 of 1948. Check for amendments and any later applicable text before relying on it.
7. Summarize the issue in a short clause map
For a review memo, record the cap, carve-outs, indemnity, definitions, loss exclusions, notice and control of defence or settlement, and governing law. Then state a qualified conclusion and identify points that need confirmation or negotiation.
Takeaway: Do not decide the question from one clause heading. Read the contract provisions together and separate what the wording says from what needs interpretation under the governing law. This example is educational and is not legal advice on a specific agreement.