What is an Omnibus clause & how it works
- Abhilasha Sharma
- Feb 13, 2024
- 2 min read
Updated: Mar 8, 2024
What is the meaning of omnibus?
The term "omnibus" has its origins in Latin. It comes from the word "omnibus," which means "for all" or "for everyone." The term was originally used to describe a horse-drawn carriage in the 19th century that could carry a large number of passengers. The idea was that this type of carriage was suitable for transporting people from various walks of life or, in other words, "for all."
Over time, the term "omnibus" has been adapted for various uses. In a legal context, the "omnibus clause" typically refers to a broad or all-encompassing provision in a legal document, contract, or statute that covers a range of related issues or situations. It is designed to be comprehensive and inclusive, addressing a variety of matters within a single provision.
Here's a simplified example of how an omnibus clause might be expressed:
"Omnibus Clause: This agreement shall be deemed to include any additional terms, conditions, or provisions necessary to effectuate its purposes, as agreed upon by the parties in writing. Any references in this agreement to 'affiliates,' 'subsidiaries,' or 'related entities' shall include all entities now or hereafter affiliated with or related to the parties, whether directly or indirectly."
In this example:
"Omnibus Clause" is the title of the provision.
The clause indicates that the agreement is comprehensive and includes additional terms as agreed upon in writing.
It provides broad definitions, such as those for "affiliates," "subsidiaries," or "related entities," to cover a wide range of potential relationships.
As you can see, specifics are missing in the omnibus clause, it is generally avoided, and are used in the contract only when permission is givevn. For example, in the automobile liability policies, that extends the coverage beyond the mentioned parties.
The omnibus clause get applied when an insured vehicle is driven, the insurance claims get extended to cover all the drivers of the insured vehicle. The drivers must have the permission oral or written to drive the insured vehicle.
As, you can see, how many drivers can be insured is not clear, often this clause is at the mercy of interpretations.
Examples of Omnibus clause:
A. Section 15 in The Trade Unions Act, 1926
Section covers all the members of the trade union. If any compensation is to be given, if damages are to be covered of the union then, compensations and rmedies are extended to all the members of the union.
B.Article 23 in Constitution of India
Article 23 covers all the people facing traffiking, and force labour, without putting a limit on the relief.
Reference:
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