Risk allocation in oil and gas contracts

The oil and gas industry has developed a number of contracting  practices to allow it to regulate and manage these physical risks. Generally speaking, and subject to certain important exceptions, up- and midstream oil and gas contracts seek to depart quite radically from the common law’s presumptions about how such risk should be allocated. Three vehicles are commonly used to achieve this risk re-allocation: (a) indemnity and hold harmless clauses; (b) clauses which exclude or limit liability for what are commonly, if rather loosely, described as ‘consequential losses;’ and (c) overall limitations on liability.

– Greg Gordon, “Risk allocation in oil and gas contracts,” in Greg Gordon, John Peterson and Emre Usenmez (ads), Oil and gas law–current practice and emerging trends  2nd edition (Dundee, 2011) p443. 


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