Indemnity Obligation

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An Indemnity Obligation is a contract obligation of one party (the indemnitor) to compensate the loss incurred by another party (the indemnitee) due to the relevant acts of the indemnitor or any other party.

  • Context:
  • Example(s):
    • Simple Atomic Provision Indemnity Obligation (unilateral, narrow scope): "The Supplier shall indemnify the Buyer against any claims, damages, or losses arising from defects in the products supplied.".
    • Bilateral Indemnity Clause Obligation (bilateral, broad scope): "Each party shall indemnify and hold harmless the other party and its affiliates, officers, directors, employees, and agents from and against any and all claims, damages, liabilities, costs, and expenses (including reasonable attorneys' fees) arising out of or relating to any breach of this Agreement by the indemnifying party or its representatives.".
    • Limited Financial Cap Indemnity Article Obligation (unilateral, limited financial cap): "Indemnification by the Consultant: The Consultant agrees to indemnify, defend, and hold harmless the Client, its officers, directors, employees, and agents from and against any claims, liabilities, damages, losses, costs, or expenses (including reasonable attorneys' fees) arising out of or in connection with the Consultant's negligence, willful misconduct, or breach of this Agreement. However, the Consultant's total liability under this indemnity shall not exceed the total fees paid by the Client to the Consultant under this Agreement.".
    • Unlimited Financial Cap Indemnity Provision Obligation (bilateral, unlimited financial cap): "The Licensor and Licensee shall each indemnify, defend, and hold harmless the other party from and against any and all third-party claims, damages, liabilities, costs, and expenses (including reasonable attorneys' fees) arising out of or in connection with any alleged or actual infringement of intellectual property rights in connection with the use of the licensed software.".
    • Narrow Scope Indemnity Clause with Exclusions Obligation (unilateral, narrow scope): "The Manufacturer shall indemnify and hold harmless the Distributor from any claims, damages, or liabilities arising solely from defects in the products manufactured by the Manufacturer, provided that such defects are not caused by the Distributor's mishandling, modification, or improper use of the products. This indemnity shall not apply to any claims, damages, or liabilities resulting from the Distributor's negligence or breach of this Agreement.".
    • Broad Scope Indemnity Article with Time Limit Obligation (bilateral, broad scope):

      "Mutual Indemnification:

      1. The Company shall indemnify, defend, and hold harmless the Contractor and its affiliates, officers, directors, employees, and agents from and against any claims, damages, liabilities, costs, and expenses (including reasonable attorneys' fees) arising out of or relating to the Company's breach of this Agreement or its negligence or willful misconduct.
      2. The Contractor shall indemnify, defend, and hold harmless the Company and its affiliates, officers, directors, employees, and agents from and against any claims, damages, liabilities, costs, and expenses (including reasonable attorneys' fees) arising out of or relating to the Contractor's breach of this Agreement or its negligence or willful misconduct.
      3. The indemnification obligations under this Article shall survive the termination of this Agreement for a period of three (3) years.".
    • ...
  • Counter-Example(s):
  • See: Agency (Law), Contract Law, Party (Law), Financial Compensation, Guarantee, Default (Finance), Insurance.


References

2023

  • (Wikipedia, 2023) ⇒ https://en.wikipedia.org/wiki/Indemnity Retrieved:2023-8-18.
    • In contract law, an indemnity is a contractual obligation of one party (the indemnitor) to compensate the loss incurred by another party (the indemnitee) due to the relevant acts of the indemnitor or any other party. The duty to indemnify is usually, but not always, coextensive with the contractual duty to "hold harmless" or "save harmless". In contrast, a "guarantee" is an obligation of one party (the guarantor) to another party to perform the promise of a relevant other party if that other party defaults.

      Indemnities form the basis of many insurance contracts; for example, a car owner may purchase different kinds of insurance as an indemnity for various kinds of loss arising from operation of the car, such as damage to the car itself, or medical expenses following an accident. In an agency context, a principal may be obligated to indemnify their agent for liabilities incurred while carrying out responsibilities under the relationship. While the events giving rise to an indemnity may be specified by contract, the actions that must be taken to compensate the injured party are largely unpredictable, and the maximum compensation is often expressly limited.