“Knock for knock” is a joint contractual agreement in the oil and gas industry.  The operator of an oil and gas property needs the help and know-how of many types of contractors, including drilling companies, drilling service providers, facility builders, equipment suppliers and caterers. As a general rule, the operator will use these services as part of a master service contract that defines the essential general conditions under which the work is performed. One of these conditions is the distribution of the risk of loss between people and property. In general, a knock-for-knock agreement means that any party working on an oil and gas site – the operator and any contractor – agrees to protect and compensate all other parties against violations by employees and agents of that party as well as the destruction or damage of that party`s property. This allowance is not based on the fault or guilt of the individual whose staff was injured or whose property was damaged. The objective is to effectively defend and pay a debt through the co-responsibility of a single party responsible for the loss. The KFK agreement continued to be improvised with the introduction of NO-fault Own Damage. In doing so, the owner of the vehicle involved in an accident, which he has no fault of, can argue against his own insurer without losing his NCD. Commonly known as ODKFK (Own Damage Knock for Knock) Individual Agreement – A KFK clause agreed at an individual hearing is deemed invalid insofar as liability for intentional conduct (i.e. intentional misconduct) is excluded; However, in all other cases, a clause relating to the EAC is in principle considered valid. Situation: Mixed Applicability and application of CEC clauses are uncertain. Inconsistent approaches and justifications, not only between states, but also between jurisdictions of the same state, do little to improve the applicability of CEC clauses.
Each clause must be assessed independently, taking into account the language of the agreement, the existence of insurance and the potential applicability of a hostile right, in order to determine whether the clause can be invoked and whether that clause provides reasonable protection.