An Indemnification clause acts an inter-party insurance policy, shifting risk and liability between the parties. It does so by creating the obligation that one party (the Indemnitor) will pay for losses the other party becomes liable for (the Indemnitee), either for any losses related to the agreement, or for losses from certain types of claims.
A separate obligation, but also commonly included in the Indemnification clause, is Defense, where the Indemnitor will not only pay the losses of the Indemnitee, but will defend (hire a lawyer to defend) the Indemnitee against the claim in court.
Indemnity can be limited not only to losses only from certain types of claims, but also to certain amounts of losses.
Finally, the common indemnification obligation is to indemnify the Indemnitee against Third-Party Claims, claims brought by someone other than the parties to the agreement. However, less common is the trend of some parties to indemnify each other against inter-party claims, also known as Direct Claims, claims that one party to the agreement brings against the other. The usefulness of Direct Claim indemnification is limited, and is typically meant to indemnify against claims relating to the representations and warranties made between the two parties.
Our base clause is the simplest indemnification obligation. It is appropriate for simple, low-risk, and low-money value agreements. Including complex indemnification clauses can add signification negotiation and transaction costs, which may not be necessary for smaller, simpler agreements. Our variants add limits and exclusions to the Indemnification Obligation, indemnification procedures, and defense obligations, and are build in modules so as to be easily customizable by the user. They also enumerate what types of claims can be indemnified, including an option for the parties to specify their own specific covered claims they would like to indemnify against. The parties should decide together which of the enumerated covered claims they want to include, and whether to use the option of defining their own specific covered claim.
For more, see the Discussion below.
For more alternatives on scope of the core indemnification obligation, including variants tailored specifically to third party claims or direct claims, see our Indemnification Obligation clause.
Indemnification
Indemnification by [PARTY B]. [PARTY B] (as an indemnifying party) shall indemnify [PARTY A] (as an indemnified party) against all losses and expenses arising out of any proceeding
arising out of [PARTY B]'s breach of its obligations, representations, warranties, or covenants under this agreement.
Mutual Indemnification. Each party (as an indemnifying party) shall indemnify the other (as an indemnified party) against all losses arising out of any proceeding
brought by either a third party or an indemnified party, and
arising out of the indemnifying party's willful misconduct or gross negligence.
Notice and Failure to Notify
Notice Requirement. Before bringing a claim for indemnification, the indemnified party shall
notify the indemnifying party of the indemnifiable proceeding, and
deliver to the indemnifying party all legal pleadings and other documents reasonably necessary to indemnify or defend the indemnifiable proceeding.
Failure to Notify. If the indemnified party fails to notify the indemnifying party of the indemnifiable proceeding, the indemnifying will be relieved of its indemnification obligations to the extent it was prejudiced by the indemnified party's failure.
Exclusive Remedy. The parties' right to indemnification is the exclusive remedy available in connection with the indemnifiable proceedings described in this section [INDEMNIFICATION].
Indemnification
[PARTY A] Indemnification. [PARTY A] shall indemnify [PARTY B] against all Indemnifiable Losses arising out of any Indemnifiable Proceeding.
Notice and Failure to Notify.
Notice Requirement. Before bringing a claim for indemnification, [PARTY B] shall
promptly notify [PARTY A] of the Indemnifiable Proceeding, and
deliver to [PARTY A] all legal pleadings and documents necessary to defend the Indemnifiable Proceeding.
Failure to Notify. If [PARTY B] fails to notify [PARTY A] of the Indemnifiable Proceeding, [PARTY A] will be relieved of its indemnification obligations to the extent it was prejudiced by [PARTY B]'s failure.
Defense
Right to Defend. In addition to indemnifying [PARTY B] against all Indemnifiable Losses, [PARTY A] may defend [PARTY B] against the Indemnifiable Proceeding.
Notice of Defense. To assume the defense, [PARTY A] must promptly notify [PARTY B] that it is doing so.
Authority to Contest, Pay, or Settle. [PARTY A] may contest, pay, or settle the Indemnifiable Proceeding without obtaining [PARTY B]'s consent, only if [PARTY A]'s decision
does not require [PARTY B] to make any admission that it acted unlawfully,
does not effect any other legal proceeding against [PARTY B],
provides that the claimant's monetary damages are paid in full by [PARTY A], and
requires claimant release [PARTY B] from all liability related to the Indemnifiable Proceeding.
Exclusive Remedy. [PARTY B]'s right to indemnification is the exclusive remedy available in connection with the Indemnifiable Proceedings.
Definitions
Indemnifiable Proceeding. "Indemnifiable Proceeding" means any judicial, administrative, or arbitration action, suit, claim, investigation, or proceeding against [PARTY B] arising out of this agreement and
arising out of [PARTY A]'s gross negligence, omission, or willful misconduct, or
in connection with [SPECIFIED CLAIMS].
Indemnifiable Losses. "Indemnifiable Losses" means the aggregate of Losses and Litigation Expenses.
Losses. "Losses" means any amount awarded in, or paid in settlement of, any Indemnifiable Proceeding, including any interest accrued, but excluding any Litigation Expenses.
Litigation Expense. "Litigation Expense" means any reasonable out-of-pocket expense incurred in defending an Indemnifiable Proceeding or in any related investigation or negotiation, including court filing fees, court costs, arbitration fees, witness fees, and attorneys’ and other professionals’ fees and disbursements.
Limits and Exclusions
Minimum Indemnifiable Losses. [PARTY A] will not be required to indemnify [PARTY B] against Indemnifiable Losses that are less than $[MINIMUM INDEMNIFIABLE LOSS AMOUNT].
Maximum Indemnifiable Losses. [PARTY A] will not be required to indemnify [PARTY B] against Indemnifiable Losses that are more than $[MAXIMUM INDEMNIFIABLE LOSS AMOUNT].
Exclusions. [PARTY A] will not be required to indemnify [PARTY B] against Indemnifiable Losses to the extent [PARTY B] acted unlawfully, negligently, or intentionally to cause those Indemnifiable Losses.
Indemnification
[PARTY A] Indemnification. [PARTY A] shall indemnify [PARTY B] against all Indemnifiable Losses arising out of any Indemnifiable Proceeding.
Notice and Failure to Notify.
Notice Requirement. Before bringing a claim for indemnification, [PARTY B] shall
promptly notify [PARTY A] of the Indemnifiable Proceeding, and
deliver to [PARTY A] all legal pleadings and documents necessary to defend the Indemnifiable Proceeding.
Failure to Notify. If [PARTY B] fails to notify [PARTY A] of the Indemnifiable Proceeding, [PARTY A] will be relieved of its indemnification obligations to the extent it was prejudiced by [PARTY B]'s failure.
Defense
Right to Defend. In addition to indemnifying the[PARTY B] against all Indemnifiable Losses, [PARTY A] may defend [PARTY B] against the Indemnifiable Proceeding.
Notice of Defense. To assume the defense, [PARTY A] must promptly notify [PARTY B] that it is doing so.
Authority to Contest, Pay, or Settle. [PARTY A] may contest, pay, or settle the Indemnifiable Proceeding without obtaining [PARTY B]'s consent, only if [PARTY A]'s decision
does not require [PARTY B] to make any admission that it acted unlawfully,
does not effect any other legal proceeding against [PARTY B],
provides that the claimant's monetary damages are paid in full by [PARTY A], and
requires claimant release [PARTY B] from all liability related to the Indemnifiable Proceeding.
Exclusive Remedy. [PARTY B]'s right to indemnification is the exclusive remedy available in connection with the Indemnifiable Proceedings.
Definitions
Indemnifiable Proceeding. "Indemnifiable Proceeding" means any judicial, administrative, or arbitration action, suit, claim, investigation, or proceeding against [PARTY B] arising out of this agreement and
arising out of [PARTY A]'s gross negligence, omission, or willful misconduct, or
in connection with [SPECIFIED CLAIMS].
Indemnifiable Losses. "Indemnifiable Losses" means the aggregate of Losses and Litigation Expenses.
Losses. "Losses" means any amount awarded in, or paid in settlement of, any Indemnifiable Proceeding, including any interest accrued, but excluding any Litigation Expenses.
Litigation Expense. "Litigation Expense" means any reasonable out-of-pocket expense incurred in defending an Indemnifiable Proceeding or in any related investigation or negotiation, including court filing fees, court costs, arbitration fees, witness fees, and attorneys’ and other professionals’ fees and disbursements.
Indemnification
Indemnification Obligation. Subject to paragraph [NOTICE AND FAILURE TO NOTIFY], the receiving party shall indemnify the disclosing party against all losses suffered by the disclosing party and arising out of the receiving party or its Representative's
unauthorized or improper use or disclosure of any Confidential Information,
breach of its obligations under this agreement, or
misconduct or negligence.
Notice and Failure to Notify
Notice Requirement. Before bringing a claim for indemnification, the indemnified party shall
notify the indemnifying party of the indemnifiable proceeding, and
deliver to the indemnifying party all legal pleadings and other documents reasonably necessary to indemnify or defend the indemnifiable proceeding.
Failure to Notify. If the indemnified party fails to notify the indemnifying party of the indemnifiable proceeding, the indemnifying will be relieved of its indemnification obligations to the extent it was prejudiced by the indemnified party's failure.
Exclusive Remedy. The parties' right to indemnification is the exclusive remedy available in connection with the indemnifiable proceedings described in this section [INDEMNIFICATION].
Indemnification. [PARTY A] shall indemnify [PARTY B] against all losses suffered by [PARTY A] arising out of [PARTY B]'s actions or omissions in its capacity as a senior executive or member of the Board, unless such actions or omissions constitute willful misconduct or gross negligence by [PARTY B].
Indemnification and Notification
Indemnity. [PARTY B] shall indemnify, defend and hold harmless [PARTY A] and its collaborators, suppliers and licensors, and their officers, directors, agents and employees from and against any claim, proceeding, loss, damage, fine, penalty, interest and expense (including, without limitation, fees for attorneys and other professional advisors) arising out of or in connection with [PARTY B]'s:
access to or use of the Service or third party content and services;
breach of this agreement;
violation of law;
negligence or willful misconduct; or
violation of the rights of a third party.
Notification of Claim. [PARTY B] will promptly notify [PARTY A] in writing of any third-party claim arising out of or in connection with [PARTY B]'s access to or use of the Service.
Indemnification of [PARTY B]. [PARTY A] shall indemnify [PARTY B] to the fullest extent permitted by applicable Law, including the following obligations.
Proceedings Brought by Third Parties. [PARTY A] shall indemnify [PARTY B] against all Indemnifiable Losses incurred in connection with any Indemnifiable Proceeding brought or threatened by a third party against [PARTY B], as long as [PARTY B]
did not act in bad faith, and in a manner [PARTY B] knew or should have known was opposed to [PARTY A]'s best interests,
did not knowingly commit or willful misconduct, or
as to any criminal proceeding, had no reasonable cause to believe that his or her conduct was unlawful.
Proceedings Brought by or in Right of [PARTY A]. [PARTY A] shall indemnify [PARTY B] against all Indemnifiable Losses incurred in connection with any Indemnifiable Proceeding brought by or in the right of [PARTY A] against [PARTY B], as long as
[PARTY B] acted in good faith and in a manner [PARTY B] reasonably believed to be in or not opposed to the best interests of [PARTY A], except for
if applicable Law provides, such Indemnifiable Losses in connection with an Indemnifiable Proceeding in which [PARTY B] is determined to be liable to [PARTY A] unless and to the extent that the [COURT] determines that such indemnification may be made.
Indemnification Even When Wholly or Partly Successful
Wholly Successful Claims. [PARTY A]'s shall indemnify [PARTY B] under this agreement in connection with Indemnifiable Proceedings where [PARTY B] is
wholly-successful, on the merits or otherwise, or
successful, on the merits or otherwise, as to one or more, but not all, claims, issues, or matters in the Indemnifiable Proceeding.
Termination by Dismissal. For purposes of this paragraph [INDEMNIFICATION EVEN WHEN WHOLLY OR PARTIALLY SUCCESSFUL], the termination of any Indemnifiable Proceeding, or any claim, issue, or matter within an Indemnifiable Proceeding, by dismissal, with or without prejudice, will be deemed to be a successful result as to the Indemnifiable Proceeding, claim, issue or matter.
Indemnification for Expenses of a Witness. To the extent that [PARTY B] is, by reason of his or her corporate status, a witness in any proceeding to which [PARTY B] is not a party, [PARTY A] shall indemnify [PARTY B] to the extent permitted by applicable Law against all Indemnifiable Losses actually and reasonably incurred by [PARTY B] or on [PARTY B]'s behalf in connection with his or her role as a witness.
Indemnification
[PARTY B] Indemnification. [PARTY B] shall indemnify [PARTY A] against all Indemnifiable Losses arising out of any Indemnifiable Proceeding.
Notice and Failure to Notify.
Notice Requirement. Before bringing a claim for indemnification, [PARTY A] shall
promptly notify [PARTY B] of the Indemnifiable Proceeding, and
deliver to [PARTY B] all legal pleadings and documents necessary to defend the Indemnifiable Proceeding.
Failure to Notify. If [PARTY A] fails to notify [PARTY B] of the Indemnifiable Proceeding, [PARTY B] will be relieved of its indemnification obligations to the extent it was prejudiced by [PARTY A]'s failure.
Defense
Right to Defend. In addition to indemnifying [PARTY A] against all Indemnifiable Losses, [PARTY B] may defend [PARTY A] against the Indemnifiable Proceeding.
Notice of Defense. To assume the defense, [PARTY B] must promptly notify [PARTY A] that it is doing so.
Authority to Contest, Pay, or Settle. [PARTY B] may contest, pay, or settle the Indemnifiable Proceeding without obtaining [PARTY A]'s consent, only if [PARTY B]'s decision
does not require [PARTY A] to make any admission that it acted unlawfully,
does not effect any other legal proceeding against [PARTY A],
provides that the claimant's monetary damages are paid in full by [PARTY B], and
requires claimant release [PARTY A] from all liability related to the Indemnifiable Proceeding.
Exclusive Remedy. [PARTY A]'s right to indemnification is the exclusive remedy available in connection with the Indemnifiable Proceedings.
Definitions
Indemnifiable Proceeding. "Indemnifiable Proceeding" means any judicial, administrative, or arbitration action, suit, claim, investigation, or proceeding against [PARTY B] arising out of this agreement and
arising out of [PARTY B]'s gross negligence, omission, or willful misconduct, or
arising from [SPECIFIED CLAIMS].
Indemnifiable Losses. "Indemnifiable Losses" means the aggregate of Losses and Litigation Expenses.
Losses. "Losses" means any amount awarded in, or paid in settlement of, any Indemnifiable Proceeding, including any interest accrued, but excluding any Litigation Expenses.
Litigation Expense. "Litigation Expense" means any reasonable out-of-pocket expense incurred in defending an Indemnifiable Proceeding or in any related investigation or negotiation, including court filing fees, court costs, arbitration fees, witness fees, and attorneys’ and other professionals’ fees and disbursements.
Limits and Exclusions
Minimum Indemnifiable Losses. [PARTY B] will not be required to indemnify [PARTY A] against Indemnifiable Losses that are less than $[MINIMUM INDEMNIFIABLE LOSS AMOUNT].
Maximum Indemnifiable Losses. [PARTY B] will not be required to indemnify [PARTY A] against Indemnifiable Losses that are more than $[MAXIMUM INDEMNIFIABLE LOSS AMOUNT].
Exclusions. [PARTY B] will not be required to indemnify [PARTY A] against Indemnifiable Losses to the extent [PARTY A] acted unlawfully, negligently, or intentionally to cause those Indemnifiable Losses.
Indemnification
[PARTY B] Indemnification. [PARTY B] shall indemnify [PARTY A] against all Indemnifiable Losses arising out of any Indemnifiable Proceeding.
Notice and Failure to Notify.
Notice Requirement. Before bringing a claim for indemnification, [PARTY A] shall
promptly notify [PARTY B] of the Indemnifiable Proceeding, and
deliver to [PARTY B] all legal pleadings and documents necessary to defend the Indemnifiable Proceeding.
Failure to Notify. If [PARTY A] fails to notify [PARTY B] of the Indemnifiable Proceeding, [PARTY B] will be relieved of its indemnification obligations to the extent it was prejudiced by [PARTY A]'s failure.
Defense
Right to Defend. In addition to indemnifying [PARTY A] against all Indemnifiable Losses, [PARTY B] may defend [PARTY A] against the Indemnifiable Proceeding.
Notice of Defense. To assume the defense, [PARTY B] must promptly notify [PARTY A] that it is doing so.
Authority to Contest, Pay, or Settle. [PARTY B] may contest, pay, or settle the Indemnifiable Proceeding without obtaining [PARTY A]'s consent, only if [PARTY B]'s decision
does not require [PARTY A] to make any admission that it acted unlawfully,
does not effect any other legal proceeding against [PARTY A],
provides that the claimant's monetary damages are paid in full by [PARTY B], and
requires claimant release [PARTY A] from all liability related to the Indemnifiable Proceeding.
Exclusive Remedy. [PARTY A]'s right to indemnification is the exclusive remedy available in connection with the Indemnifiable Proceedings.
Definitions
Indemnifiable Proceeding. "Indemnifiable Proceeding" means any judicial, administrative, or arbitration action, suit, claim, investigation, or proceeding against [PARTY B] arising out of this agreement and
arising out of [PARTY B]'s gross negligence, omission, or willful misconduct, or
in connection with [SPECIFIED CLAIMS].
Indemnifiable Losses. "Indemnifiable Losses" means the aggregate of Losses and Litigation Expenses.
Losses. "Losses" means any amount awarded in, or paid in settlement of, any Indemnifiable Proceeding, including any interest accrued, but excluding any Litigation Expenses.
Litigation Expense. "Litigation Expense" means any reasonable out-of-pocket expense incurred in defending an Indemnifiable Proceeding or in any related investigation or negotiation, including court filing fees, court costs, arbitration fees, witness fees, and attorneys’ and other professionals’ fees and disbursements.
Indemnification
Indemnification by [PARTY A]. [PARTY A] (as an indemnifying party) shall indemnify [PARTY B] (as an indemnified party) against all losses and expenses arising out of any proceeding
arising out of [PARTY A]'s breach of its obligations, representations, warranties, or covenants under this agreement, or
arising out of [PARTY B]'s proper exercise of its rights to the [Licensed Goods / Licensed Software / Licensed Methods] under the [DELIVERABLE] and this agreement.
Indemnification by [PARTY B]. [PARTY B] (as an indemnifying party) shall indemnify [PARTY A] (as an indemnified party) against all losses and expenses arising out of any proceeding
arising out of [PARTY B]'s breach of its obligations, representations, warranties, or covenants under this agreement, or
arising out of [PARTY B]'s unauthorized exercise of the rights to the [Licensed Goods / Licensed Software / Licensed Methods] in breach of the [DELIVERABLE] or this agreement.
Mutual Indemnification. Each party (as an indemnifying party) shall indemnify the other (as an indemnified party) against all losses arising out of any proceeding
brought by either a third party or an indemnified party, and
arising out of the indemnifying party's willful misconduct or gross negligence.
Notice and Failure to Notify.
Notice Requirement. Before bringing a claim for indemnification, an indemnified party shall
promptly notify the indemnifying party of the indemnifiable proceeding, and
deliver to the indemnifying party all legal pleadings and documents necessary to defend the indemnifiable proceeding.
Failure to Notify. If the indemnified party fails to notify indemnifying party of the indemnifiable proceeding, indemnifying party will be relieved of its indemnification obligations to the extent it was prejudiced by indemnified party's failure.
Exclusive Remedy. The parties' right to indemnification is the exclusive remedy available in connection with the indemnifiable proceedings.
Indemnification
Indemnification and Reimbursement by [PARTY A]
Indemnification for Holders. Subject to paragraph [EXCEPTIONS FOR PARTY A], if any Registrable Securities are included in a Registration Statement, [PARTY A] shall indemnify each Holder, the partners, officers, and directors of each Holder, any underwriter (as defined in the Securities Act) for such Holder and each other Person, if any, who controls such Holder or underwriter within the meaning of the Securities Act, the Exchange Act, or other federal or state Law (each, a "Holder Indemnified Person"), against any Claims arising out of any Violation.
Reimbursement for Holders' Expenses. If any Registrable Securities are included in a Registration Statement, [PARTY A] shall reimburse each Holder Indemnified Person for any expenses reasonably incurred in connection with investigating or defending any such Claims.
Exceptions For [PARTY A]'s Indemnification Obligations
Consent to Settlements. [PARTY A] will not be required to pay any amounts in settlement of any Claim unless it consents to the settlement in writing.
Violations in Reliance on Holder Indemnified Persons. [PARTY A] will not be liable for any Claims based on a Violation that occurs in reliance on written information furnished by a Holder Indemnified Person expressly for use in connection with such registration.
Indemnification and Reimbursement by Holders
Indemnification for [PARTY A]. Each selling Holder shall indemnify [PARTY A], the partners, officers, and directors of [PARTY A], any underwriter (as defined in the Securities Act) for [PARTY A] and each other Person, if any, controlling [PARTY A] or underwriter within the meaning of the Securities Act, the Exchange Act, or other federal or state Law (each, a "[PARTY A] Indemnified Person"), against any Claims (joint or several) arising out of any Violation, in each case to the extent the Violation occurs in reliance on written information furnished by the Holder expressly for use in connection with the registration.
Reimbursement for [PARTY A]'s Expenses. Each selling Holder shall reimburse for any legal or other expenses reasonably incurred by any [PARTY A] Indemnified Person, in connection with investigating or defending any such Claim.
Exceptions For Holders' Indemnification Obligations
Consent to Settlement. A Holder will not be required to pay any amounts in settlement of any Claim, unless it consents to the settlement in writing.
Cap on Indemnification. No Holder will be required to indemnify any party under this paragraph [INDEMNIFICATION AND REIMBURSEMENT BY HOLDERS] for losses, damages, or expenses exceeding the net proceeds the Holder received form the offering.
Definitions
Violation. (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law;
Indemnification
Indemnification by [PARTY B]. [PARTY B] (as an indemnifying party) shall indemnify [PARTY A] (as an indemnified party) against all losses and expenses arising out of any proceeding
arising out of [PARTY B]'s operation of the Franchised Business or any other use of the Franchise Location.
Mutual Indemnification. Each party (as an indemnifying party) shall indemnify the other (as an indemnified party) against all losses arising out of any proceeding
brought by either a third party or an indemnified party, and
arising out of the indemnifying party's willful misconduct or gross negligence.
Notice and Failure to Notify
Notice Requirement. Before bringing a claim for indemnification, the indemnified party shall
notify the indemnifying party of the indemnifiable proceeding, and
deliver to the indemnifying party all legal pleadings and other documents reasonably necessary to indemnify or defend the indemnifiable proceeding.
Failure to Notify. If the indemnified party fails to notify the indemnifying party of the indemnifiable proceeding, the indemnifying will be relieved of its indemnification obligations to the extent it was prejudiced by the indemnified party's failure.
Exclusive Remedy. The parties' right to indemnification is the exclusive remedy available in connection with the indemnifiable proceedings described in this section [INDEMNIFICATION].
Indemnification
Indemnification by [PARTY B]. [PARTY B] (as an indemnifying party) shall indemnify [PARTY A] (as an indemnified party) against all losses and expenses arising out of any proceeding
arising out of [PARTY B]'s work on the [DELIVERABLE].
Mutual Indemnification. Each party (as an indemnifying party) shall indemnify the other (as an indemnified party) against all losses arising out of any proceeding
brought by either a third party or an indemnified party, and
arising out of the indemnifying party's willful misconduct or gross negligence.
Notice and Failure to Notify
Notice Requirement. Before bringing a claim for indemnification, the indemnified party shall
notify the indemnifying party of the indemnifiable proceeding, and
deliver to the indemnifying party all legal pleadings and other documents reasonably necessary to indemnify or defend the indemnifiable proceeding.
Failure to Notify. If the indemnified party fails to notify the indemnifying party of the indemnifiable proceeding, the indemnifying will be relieved of its indemnification obligations to the extent it was prejudiced by the indemnified party's failure.
Exclusive Remedy. The parties' right to indemnification is the exclusive remedy available in connection with the indemnifiable proceedings described in this section [INDEMNIFICATION].
Indemnification. From the Effective date until the Retirement Date, [PARTY A] shall continue to indemnify [PARTY B] according to the indemnification obligations under section [INDEMNIFICATION] of [PARTY B]'s employment agreement[, and [PARTY A]'s bylaws or certificate of incorporation as applicable], attached to this agreement in [ATTACHMENT].
Indemnification. [PARTY A] shall continue to indemnify [PARTY B] according to the indemnification obligations under section [INDEMNIFICATION] of [PARTY B]'s employment agreement[, and [PARTY A]'s bylaws or certificate of incorporation as applicable], attached to this agreement in [ATTACHMENT].
Indemnification
Indemnification by [PARTY B]. [PARTY A] (as an indemnifying party) shall indemnify [PARTY B] (as an indemnified party) against all losses and expenses arising out of any proceeding
arising out of a claim that the [DELIVERABLE] infringes the third party's Intellectual Property rights.
Mutual Indemnification. Each party (as an indemnifying party) shall indemnify the other (as an indemnified party) against all losses arising out of any proceeding
brought by either a third party or an indemnified party, and
arising out of the indemnifying party's willful misconduct or gross negligence.
Notice and Failure to Notify
Notice Requirement. Before bringing a claim for indemnification, the indemnified party shall
notify the indemnifying party of the indemnifiable proceeding, and
deliver to the indemnifying party all legal pleadings and other documents reasonably necessary to indemnify or defend the indemnifiable proceeding.
Failure to Notify. If the indemnified party fails to notify the indemnifying party of the indemnifiable proceeding, the indemnifying will be relieved of its indemnification obligations to the extent it was prejudiced by the indemnified party's failure.
Exclusive Remedy. The parties' right to indemnification is the exclusive remedy available in connection with the indemnifiable proceedings described in this section [INDEMNIFICATION].
Indemnification
Indemnification by [PARTY B]. [PARTY B] (as an indemnifying party) shall indemnify [PARTY A] (as an indemnified party) against all losses and expenses arising out of any proceeding
arising out of [PARTY B]'s breach of its obligations, representations, warranties, or covenants under this agreement, or
arising out of any act, omission, negligence, or misconduct of a guest at the Event.
Mutual Indemnification. Each party (as an indemnifying party) shall indemnify the other (as an indemnified party) against all losses arising out of any proceeding
brought by either a third party or an indemnified party, and
arising out of the indemnifying party's willful misconduct or gross negligence.
Notice and Failure to Notify
Notice Requirement. Before bringing a claim for indemnification, the indemnified party shall
notify the indemnifying party of the indemnifiable proceeding, and
deliver to the indemnifying party all legal pleadings and other documents reasonably necessary to indemnify or defend the indemnifiable proceeding.
Failure to Notify. If the indemnified party fails to notify the indemnifying party of the indemnifiable proceeding, the indemnifying will be relieved of its indemnification obligations to the extent it was prejudiced by the indemnified party's failure.
Exclusive Remedy. The parties' right to indemnification is the exclusive remedy available in connection with the indemnifiable proceedings described in this section [INDEMNIFICATION].
Indemnification
Indemnification by [PARTY A]. [PARTY A] (as an indemnifying party) shall indemnify [PARTY B] (as an indemnified party) against all losses and expenses arising out of any proceeding
arising out of [PARTY A]'s breach of its obligations, representations, warranties, or covenants under this agreement.
Mutual Indemnification. Each party (as an indemnifying party) shall indemnify the other (as an indemnified party) against all losses arising out of any proceeding
brought by either a third party or an indemnified party, and
arising out of the indemnifying party's willful misconduct or gross negligence.
Exclusions. Neither party will be required to indemnify the other against losses to the extent the other party acted unlawfully, negligently, or intentionally to cause those losses.
Notice and Failure to Notify
Notice Requirement. Before bringing a claim for indemnification, the indemnified party shall
notify the indemnifying party of the indemnifiable proceeding, and
deliver to the indemnifying party all legal pleadings and other documents reasonably necessary to indemnify or defend the indemnifiable proceeding.
Failure to Notify. If the indemnified party fails to notify the indemnifying party of the indemnifiable proceeding, the indemnifying party will be relieved of its indemnification obligations to the extent it was prejudiced by the indemnified party's failure.
Defense. The indemnifying party may elect to defend the indemnified party in the proceeding by giving prompt written notice after receiving notice of the proceeding.
Authority to Contest, Pay, or Settle. The indemnifying party may contest, pay, or settle the proceeding without obtaining the indemnified party's consent, only if the indemnifying party's decision
does not require the indemnified party to make any admission that it acted unlawfully,
does not effect any other legal proceeding against the indemnified party,
provides that the indemnifying party will pay the claimant's monetary damages in full, and
requires claimant release the indemnified party from all liability related to the proceeding.
Exclusive Remedy. The parties' rights to indemnification is the exclusive remedy available in connection with the indemnifiable proceedings described in this section [INDEMNIFICATION].
Indemnification
Indemnification by [PARTY B]. [PARTY B] (as an indemnifying party) shall indemnify [PARTY A] (as an indemnified party) against all losses and expenses arising out of any proceeding
arising out of [PARTY B]'s breach of its obligations, representations, warranties, or covenants under this agreement.
Indemnification by [PARTY A]. [PARTY A] (as an indemnifying party) shall indemnify [PARTY B] (as an indemnified party) against all losses and expenses arising out of any proceeding
brought by a third party, and
arising out of a claim that [PARTY B]'s sale of Products infringes the third party's Intellectual Property rights.
Mutual Indemnification. Each party (as an indemnifying party) shall indemnify the other (as an indemnified party) against all losses arising out of any proceeding
brought by either a third party or an indemnified party, and
arising out of the indemnifying party's willful misconduct or gross negligence.
Exclusions. Neither party will be required to indemnify the other against losses to the extent the other party acted unlawfully, negligently, or intentionally to cause those losses.
Notice and Failure to Notify
Notice Requirement. Before bringing a claim for indemnification, the indemnified party shall
notify the indemnifying party of the indemnifiable proceeding, and
deliver to the indemnifying party all legal pleadings and other documents reasonably necessary to indemnify or defend the indemnifiable proceeding.
Failure to Notify. If the indemnified party fails to notify the indemnifying party of the indemnifiable proceeding, the indemnifying will be relieved of its indemnification obligations to the extent it was prejudiced by the indemnified party's failure.
Defense. The indemnifying party may elect to defend the indemnified party in the proceeding by giving prompt written notice after receiving notice of the proceeding.
Authority to Contest, Pay, or Settle. The indemnifying party may contest, pay, or settle the proceeding without obtaining the indemnified party's consent, only if the indemnifying party's decision
does not require the indemnified party to make any admission that it acted unlawfully,
does not effect any other legal proceeding against the indemnified party,
provides that the indemnifying party will pay the claimant's monetary damages in full, and
requires claimant release the indemnified party from all liability related to the proceeding.
Exclusive Remedy. The parties' right to indemnification is the exclusive remedy available in connection with the indemnifiable proceedings described in this section [INDEMNIFICATION].
Indemnification
Indemnification by [PARTY B]. [PARTY B] (as an indemnifying party) shall indemnify [PARTY A] (as an indemnified party) against all losses and expenses in connection with any proceeding arising out of
[PARTY B]'s use of the Software, and
[PARTY B]'s unauthorized customization, modification, or other alterations to the Software, including claims that its customization, modification, or other alterations infringe a third party's Intellectual Property rights,
Mutual Indemnification. Each party (as an indemnifying party) shall indemnify the other (as an indemnified party) against all losses in connection with any proceeding arising out of the indemnifying party's willful misconduct or gross negligence.
Notice and Failure to Notify
Notice Requirement. Before bringing a claim for indemnification, the indemnified party shall
notify the indemnifying party of the indemnifiable proceeding, and
deliver to the indemnifying party all legal pleadings and other documents reasonably necessary to indemnify or defend the indemnifiable proceeding.
Failure to Notify. If the indemnified party fails to notify the indemnifying party of the indemnifiable proceeding, the indemnifying will be relieved of its indemnification obligations to the extent it was prejudiced by the indemnified party's failure.
Exclusive Remedy. The parties' right to indemnification is the exclusive remedy available in connection with the indemnifiable proceedings described in this section [INDEMNIFICATION].
Indemnification
Indemnification by [PARTY A].
Indemnification for Infringement Claims. Subject to paragraph [EXCLUSIONS], [PARTY A] (as an indemnifying party) shall indemnify [PARTY B] (as an indemnified party) against all losses and expenses arising out of any proceeding
brought by a third party, and
arising out of a claim that the Services infringe the third party's Intellectual Property rights.
Qualifications for Indemnification. [PARTY A] will be required indemnify [PARTY B] under paragraph [INDEMNIFICATION FOR INFRINGEMENT CLAIMS] only if
[PARTY B]'s use of the Services complies with this agreement and all documentation related to the Services,
the infringement was not caused by [PARTY B] modifying or altering the Services or documentation related to the Services, unless [PARTY A] consented to the modification or alteration in writing, and
the infringement was not caused by [PARTY B] combining the Services with products not supplied by [PARTY A], unless [PARTY A] consented to the combination in writing.
Mutual Indemnification. Each party (as an indemnifying party) shall indemnify the other (as an indemnified party) against all losses arising out of any proceeding
brought by either a third party or an indemnified party, and
arising out of the indemnifying party's willful misconduct or gross negligence.
Notice and Failure to Notify
Notice Requirement. Before bringing a claim for indemnification, the indemnified party shall
notify the indemnifying party of the indemnifiable proceeding, and
deliver to the indemnifying party all legal pleadings and other documents reasonably necessary to indemnify or defend the indemnifiable proceeding.
Failure to Notify. If the indemnified party fails to notify the indemnifying party of the indemnifiable proceeding, the indemnifying will be relieved of its indemnification obligations to the extent it was prejudiced by the indemnified party's failure.
Exclusive Remedy. The parties' right to indemnification is the exclusive remedy available in connection with the indemnifiable proceedings described in this section [INDEMNIFICATION].
Indemnification
Indemnification by [PARTY B]. [PARTY B] (as an indemnifying party) shall indemnify [PARTY A] (as an indemnified party) against all losses and expenses arising out of any proceeding
brought by either a third party or [PARTY A], and
arising out of [PARTY B]'s breach of its obligations, representations, warranties, or covenants under this agreement, or
arising out of [PARTY B]'s misuse or unauthorized modification of the Products or damage to the Products caused by [PARTY B], or its employees, agents, or customers.
Mutual Indemnification. Each party (as an indemnifying party) shall indemnify the other (as an indemnified party) against all losses arising out of any proceeding
brought by either a third party or an indemnified party, and
arising out of the indemnifying party's willful misconduct or gross negligence.
Notice and Failure to Notify
Notice Requirement. Before bringing a claim for indemnification, the indemnified party shall
notify the indemnifying party of the indemnifiable proceeding, and
deliver to the indemnifying party all legal pleadings and other documents reasonably necessary to indemnify or defend the indemnifiable proceeding.
Failure to Notify. If the indemnified party fails to notify the indemnifying party of the indemnifiable proceeding, the indemnifying party will be relieved of its indemnification obligations to the extent it was prejudiced by the indemnified party's failure.
Exclusive Remedy. The parties' right to indemnification is the exclusive remedy available in connection with the indemnifiable proceedings described in this section [INDEMNIFICATION].
Indemnification
Indemnification by [PARTY A].
Indemnification for Infringement Claims. Subject to paragraph [EXCLUSIONS], [PARTY A] (as an indemnifying party) shall indemnify [PARTYB] (as an indemnified party) against all losses and expenses arising out of any proceeding
arising out of a claim that the [DELIVERABLE] infringe the third party's Intellectual Property rights.
Mutual Indemnification. Each party (as an indemnifying party) shall indemnify the other (as an indemnified party) against all losses arising out of any proceeding
brought by either a third party or an indemnified party, and
arising out of the indemnifying party's willful misconduct or gross negligence.
Notice and Failure to Notify
Notice Requirement. Before bringing a claim for indemnification, the indemnified party shall
notify the indemnifying party of the indemnifiable proceeding, and
deliver to the indemnifying party all legal pleadings and other documents reasonably necessary to indemnify or defend the indemnifiable proceeding.
Failure to Notify. If the indemnified party fails to notify the indemnifying party of the indemnifiable proceeding, the indemnifying will be relieved of its indemnification obligations to the extent it was prejudiced by the indemnified party's failure.
Exclusive Remedy. The parties' right to indemnification is the exclusive remedy available in connection with the indemnifiable proceedings described in this section [INDEMNIFICATION].
Indemnification
Indemnification by [PARTY B]. [PARTY B] (as an indemnifying party) shall indemnify [PARTY A] (as an indemnified party) against all losses and expenses arising out of any proceeding
arising out of [PARTY B]'s breach of its obligations, representations, warranties, or covenants under this agreement.
Mutual Indemnification. Each party (as an indemnifying party) shall indemnify the other (as an indemnified party) against all losses arising out of any proceeding
brought by either a third party or an indemnified party, and
arising out of the indemnifying party's willful misconduct or gross negligence.
Exclusions. Neither party will be required to indemnify the other against losses to the extent the other party acted unlawfully, negligently, or intentionally to cause those losses.
Notice and Failure to Notify
Notice Requirement. Before bringing a claim for indemnification, the indemnified party shall
notify the indemnifying party of the indemnifiable proceeding, and
deliver to the indemnifying party all legal pleadings and other documents reasonably necessary to indemnify or defend the indemnifiable proceeding.
Failure to Notify. If the indemnified party fails to notify the indemnifying party of the indemnifiable proceeding, the indemnifying party will be relieved of its indemnification obligations to the extent it was prejudiced by the indemnified party's failure.
Defense. The indemnifying party may elect to defend the indemnified party in the proceeding by giving prompt written notice after receiving notice of the proceeding.
Authority to Contest, Pay, or Settle. The indemnifying party may contest, pay, or settle the proceeding without obtaining the indemnified party's consent, only if the indemnifying party's decision
does not require the indemnified party to make any admission that it acted unlawfully,
does not effect any other legal proceeding against the indemnified party,
provides that the indemnifying party will pay the claimant's monetary damages in full, and
requires claimant release the indemnified party from all liability related to the proceeding.
Exclusive Remedy. The parties' rights to indemnification is the exclusive remedy available in connection with the indemnifiable proceedings described in this section [INDEMNIFICATION].
Indemnification
General Indemnification. [PARTY A] and [PARTY B] shall jointly and severally indemnify the Escrow Agent against all losses, fees, and expenses incurred as a result of the Escrow Agent being brought into or otherwise becoming involved in any claims between [PARTY A] and [PARTY B] in connection with this agreement, unless
this agreement otherwise provides for reimbursement of the losses, fees, or expenses, or
the Escrow Agent solely caused the claim by its gross negligence or willful misconduct.
Infringement Indemnification
[PARTY A] shall indemnify the Escrow Agent, and the Escrow Agent's Representatives, against all losses, costs, and expenses incurred as a result of or in connection with a claim that the Escrow Agent's performance of its obligations under this agreement infringes a third party's Intellectual Property.
Notice and Failure to Notify
Notice Requirement. Before bringing a claim for indemnification, the Escrow Agent shall
notify the indemnifying party of the indemnifiable proceeding, and
deliver to the indemnifying party all legal pleadings and other documents reasonably necessary to indemnify or defend the indemnifiable proceeding.
Failure to Notify. If the Escrow Agent fails to notify the indemnifying party of the indemnifiable proceeding, the indemnifying will be relieved of its indemnification obligations to the extent it was prejudiced by the Escrow Agent's failure.
Exclusive Remedy. The Escrow Agent's right to indemnification is the exclusive remedy available in connection with the indemnifiable proceedings described in this section [INDEMNIFICATION].
Indemnification
Indemnification by [PARTY B]. [PARTY B] shall indemnify [PARTY A] against all losses and expenses in connection with any proceeding arising out of
[PARTY B]'s use of the Software or System, or
[PARTY B]'s violation of a third party's rights.
Mutual Indemnification. Each party shall indemnify the other against all losses in connection with any proceeding arising out of the indemnifying party's willful misconduct or gross negligence.
Notice and Failure to Notify
Notice Requirement. Before bringing a claim for indemnification, the indemnified party shall
notify the indemnifying party of the indemnifiable proceeding, and
deliver to the indemnifying party all legal pleadings and other documents reasonably necessary to indemnify or defend the indemnifiable proceeding.
Failure to Notify. If the indemnified party fails to notify the indemnifying party of the indemnifiable proceeding, the indemnifying will be relieved of its indemnification obligations to the extent it was prejudiced by the indemnified party's failure.
Exclusive Remedy. The parties' right to indemnification is the exclusive remedy available in connection with the indemnifiable proceedings described in this section [INDEMNIFICATION].
Indemnification
[PARTY B] Indemnification Obligations. [PARTY B] shall indemnify and defend [PARTY A], and [PARTY A]'s agents, advisors, employees, members, officers, directors, partners, trustees, beneficiaries, and shareholders, against all losses and damages to any person or property arising out of [PARTY B]'s
use or occupancy of the Premise, except to the extent the losses or damages are caused by [PARTY A]'s negligence or willful misconduct,
negligence or willful misconduct in, on, or in connection with the Premise, or
[PARTY B]'s breach or Default under this agreement.
Notice and Failure to Notify
Notice Requirement. Before bringing a claim for indemnification, the indemnified party shall
notify the indemnifying party of the indemnifiable proceeding, and
deliver to the indemnifying party all legal pleadings and other documents reasonably necessary to indemnify or defend the indemnifiable proceeding.
Failure to Notify. If the indemnified party fails to notify the indemnifying party of the indemnifiable proceeding, the indemnifying will be relieved of its indemnification obligations to the extent it was prejudiced by the indemnified party's failure.
Survival of Indemnification. The provisions of this section will survive the expiration or termination of this agreement with respect to any damage, injury, or death occurring before the expiration or termination.
Indemnification
Indemnification by [PARTY B]. [PARTY B] (as an indemnifying party) shall indemnify [PARTY A] (as an indemnified party) against all losses and expenses arising out of any proceeding
arising out of [PARTY B]'s breach of its obligations, representations, warranties, or covenants under this agreement.
Mutual Indemnification. Each party (as an indemnifying party) shall indemnify the other (as an indemnified party) against all losses arising out of any proceeding
brought by either a third party or an indemnified party, and
arising out of the indemnifying party's willful misconduct or gross negligence.
Notice and Failure to Notify
Notice Requirement. Before bringing a claim for indemnification, the indemnified party shall
notify the indemnifying party of the indemnifiable proceeding, and
deliver to the indemnifying party all legal pleadings and other documents reasonably necessary to indemnify or defend the indemnifiable proceeding.
Failure to Notify. If the indemnified party fails to notify the indemnifying party of the indemnifiable proceeding, the indemnifying will be relieved of its indemnification obligations to the extent it was prejudiced by the indemnified party's failure.
Indemnification
Indemnification by [PARTY B]. [PARTY B] (as an indemnifying party) shall indemnify [PARTY A] (as an indemnified party) against all losses and expenses arising out of any proceeding
arising out of [PARTY B]'s breach of its obligations, representations, warranties, or covenants under this agreement.
Mutual Indemnification. Each party (as an indemnifying party) shall indemnify the other (as an indemnified party) against all losses arising out of any proceeding
brought by either a third party or an indemnified party, and
arising out of the indemnifying party's
breach of its obligations, representations, warranties, or covenants under this agreement, or
willful misconduct or gross negligence.
Notice and Failure to Notify
Notice Requirement. Before bringing a claim for indemnification, the indemnified party shall
notify the indemnifying party of the indemnifiable proceeding, and
deliver to the indemnifying party all legal pleadings and other documents reasonably necessary to indemnify or defend the indemnifiable proceeding.
Failure to Notify. If the indemnified party fails to notify the indemnifying party of the indemnifiable proceeding, the indemnifying will be relieved of its indemnification obligations to the extent it was prejudiced by the indemnified party's failure.
Exclusive Remedy. The parties' right to indemnification is the exclusive remedy available in connection with the indemnifiable proceedings described in this section [INDEMNIFICATION].
Indemnification. You shall indemnify, defend and hold harmless the Company and its collaborators, suppliers and licensors, and their officers, directors, agents, and employees from and against any claim, proceeding, loss, damage, fine, penalty, interest, and expense (including, without limitation, fees for attorneys and other professional advisors) arising out of or in connection with
your use of the Site;
your breach of this agreement;
violation of Law;
your submission, posting, or transmission of user content to the website; or
violation of the rights of a third party.
Black’s Law Dictionary defines indemnity as: "A duty to make good any loss, damage, or liability incurred by another; or the right of an injured party to claim reimbursement for its loss, damage or liability from a person who has such a duty; or reimbursement or compensation for loss, damage, or liability in tort; especially, the right of a party who is secondarily liable to recover from the party who is primarily liable for reimbursement of expenditures paid to a third party for injuries resulting from a violation of a common-law duty." Black’s Law Dictionary, Seventh Edition.
The main negotiation points are:
The scope of indemnification contains three sub-elements: (a) indemnify, (b) defend, and (c) hold harmless. Research suggests that the clause need only include indemnity. Courts have commonly interpreted "Indemnify" and "Hold Harmless" as synonymous, and usually interpret "Indemnity" as containing "Defense" as well. It is becoming less common to see "Hold Harmless," and including it will primarily add confusion and complexity in interpreting it's meaning. On the other hand, "Defense" remains a common element in Indemnification clauses.
1.1 Indemnify - Duty to Reimburse Losses
The requirement to indemnify is an obligation to compensate the covered party for any losses or liabilities incurred by the indemnified party. Typically, the claims relate to losses incurred by the indemnified party caused by the indemnitee or brought by third parties against the indemnitee.
1.2. Defend - Duty to Provide a Defense
The duty to defend is an obligation to provide a defense against a covered claim. The obligation is distinct from the duty to reimburse losses.
First, the scope of the duty to defend may differ from the obligation to compensate for losses. “Because the duty to defend and the duty to indemnify are distinct obligations, the contract may impose a duty to defend the underlying claim even in the absence of a duty to indemnify.” Hollingsworth v. Chrysler Corp., 208 A.2d 61 (Del. 1965). In other words, the contractual duty to defend a claim may be broader than, and arise more often than, the duty to provide indemnity from a loss or judgment." Drafting And Enforcing Complex Indemnification Provisions, D. Hull Youngblood, Jr and Peter N. Flocos, K&L Gates, August 2010.
Second, the duty may be triggered at different times. The requirement to defend is triggered as soon as a claim made. In UDC-Universal Development v. CH2M Hill, the California Court of Appeals concluded, "[t]he contract between CH2M Hill and UDC called for a defense when any claim against UDC implicated CH2M Hill's performance of its role in the project. That defense obligation arose when the HOA alleged harm resulting from deficient work that was within the scope of the services for which UDC had retained CH2M Hill."
In negotiation, potential indemnitors may seek to strike any duty to defend language. “There is no common law duty of a consultant to defend its client against third-party actions. That duty can only arise as a result of a contractual liability created through the indemnification clause of the contract. Since this is a contractual liability, it is excluded from overage pursuant to the contractual liability exclusion of the errors and omissions policy.” Indemnification Clauses: Uninsurable Contractual Liability, J. Kent Holland, J.D., ConstructionRisk, LLC.
However, under California’s Code, defense obligations “are deemed included in every indemnity agreement unless the parties indicate otherwise.” Crawford v. Weather Shield Mfg., Inc., 187 P.3d 424, 44 Cal.4th 541 (2008).
1.3. Hold Harmless - Bar to Claims
In strict terms, the statement “to hold harmless” means to exonerate another from liability. Sarah E. Swank writes that "[a] hold harmless provision means that an organization is not liable for certain damages under an agreement. This clause effectively bars the party responsible for indemnification from bringing suit against the party being indemnified." Clarifying the Confusing World of Indemnification, Hold Harmless and Defense Clauses, January 2013.
In the case of Queen Villas Homeowners Ass'n v. TCB Property Mgmt., 56 Cal. Rptr. 3d 528 (Cal. Dist. Ct. App. 2007), the Court stated: "Are the words 'indemnify' and 'hold harmless synonymous?” No. One is offensive and the other is defensive-even though both contemplate third-party liability situations. ‘Indemnify’ is an offensive right – a sword – allowing an indemnitee to seek indemnification. ‘Hold harmless’ is defensive: The right not to be bothered by the other party itself seeking indemnification.” Nonetheless, the court concluded that the language of the indemnity term “should not be construed in an exculpatory manner.”
However, common practice indicates that the terms “indemnify” and “hold harmless” are interchangeable. For example, Black's Law Dictionary treats them as synonyms. As a term of art, “hold harmless” is generally interpreted to mean to protect another against harm or damage.
Most commentators propose the use of both terms. (See, Are "Indemnify" and "Hold Harmless" the Same?). For example, Sarah Swank counsels that it is "[g]enerally, it is advisable to include both indemnification and hold harmless language because of the variety of definitions of hold harmless." (http://www.ober.com/publications/2113-clarifying-confusing-world-indemnification-hold-harmless-defense-clauses) However, the same argument – that the terms covers a broader range of outcome – can also be interpreted as creating uncertainty, and for this reason, others strongly advise against its use. (See, Yet More on "Indemnify" and "Hold Harmless" and Revisiting "Indemnify", Ken Adams.
The clearest position is to exclude the term “hold harmless,” unless the parties intend to bar claims by the indemnitor, in which case the language should be clearly expressed to address such a bar to claims.
2. Nature of the Covered Claims
The nature of the indemnified claims may cover third party and, more controversially, inter-party claims.
2.1. Third Party Claims
An indemnity is most commonly used to cover third party claims, whether brought by an individual, entity, or governmental authority. For example, a licensee of software can seek indemnification from the licensor in the event the licensee is sued by a third party for infringement.
2.2. Direct (Inter-party) Claims
Historically, indemnities covered only third party claims. However, in recent years, and particularly in the United States, the scope has been expanded to include inter-party claims. IP Draughts suggests that the use of inter-party indemnities have been driven by the belief, in the US that: "if a winning party in contract litigation is to recover its legal costs, an indemnity is required. This is because the courts in the US do not generally award a winning party its legal costs. English law in this area is very different; usually the winning party is awarded some or all of its legal costs." Inappropriate use of indemnities, IP Draughts, June 29, 2011.
However, a right to attorneys' fees can be covered with a separate without the need for an indemnity that may have other effects.
The use of an inter-party indemnity is a balancing act:
(a) one the one hand, an inter-party indemnity, combined with an exclusive remedy provision, may reduce the common law rights of the indemnified party (such as specific performance), but
(b) on the other hand, the presence of an indemnity may eliminate the indemnifying party's need to prove causality between the breach and loss, and may obviate the requirement of mitigation. (However, case law indicates that mitigation may still be required.)
3. Limitations
3.1 Time
An indemnity may also include a time limit for filing an indemnity claim and may seek to reduce the statutory limitations. Depending on the jurisdiction, some courts have enforced such terms. (See: Parra v. ADT Security Services Inc., Home Owners Insurance Co. v. ADT LLC). However, certain states, including Florida, Alabama, Idaho, Mississippi and South Dakota have statutory provisions that void contract terms attempting to shorten statutory limitation periods. (See: Using Contract Provisions To Shorten The Time To Sue, Law360, New York (September 21, 2015).
3.2 Amount
Typically, indemnities for third party claims are uncapped because the risk cannot be predicted. On the other, exposure for inter-party claims can usually be capped as the value of the transaction. ...puts it succinctly: "Think of a simple example: I bought a widget from you for $5; the widget was broken; I want my $5 back directly. I don’t need $1mm of coverage, I just need my $5 back." By contrast, a third party claim for product liability may not be limited to size of the deal. What is a Cap on an Indemnity Clause and Why Should I Care?, Brian Heller, Member (Partner) at Outside GC LLC
3.3 Statutory Limitations on Indemnity for Negligence
Regulated businesses providing essential services
Construction contracts
4. Overbroad Clauses
Excessively broad language, often the result of careless drafting or over-reaching by one party may seek to shift liability where the indemnifying party is not at fault. For example:
"any use of the licensed products."
"any liability arising out of the performance of services under this agreement."
"any liability arising out of or connected with this agreement."