Indemnity Clause

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An Indemnity Clause is a risk management clause with indemnity obligations that ensure the indemnitor party takes responsibility for covering certain costs and losses of the indemniteed party if something goes wrong.



References

2023

  • (Wikipedia, 2023) ⇒ https://en.wikipedia.org/wiki/Indemnity Retrieved:2023-5-9.
    • 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.

2023

  • Q: "What Are the Elements of an Indemnity Clause?."
    • A: An indemnity clause covers the following elements:
      • Who is indemnifying whom? An indemnification provision may be mutual or one-way.
      • Arising from what events or circumstances? Third-party indemnities typically cover intellectual property infringement or product liability. Inter-parties may cover all forms of breach of contract, such as non-performance or breach of any contract terms.
      • Covering what types of losses? Losses typically include any damages awarded by the court, plus attorney's fees and other legal costs.
      • What are the qualifications for indemnity? The indemnified party is required to notify the indemnifying party of a claim and permit the indemnifying party to control the defense.
      • What are the exceptions to indemnity? In most cases, the indemnity will not cover situations where the indemnified party modifies the product or service or fails to use it in compliance with its requirements.