Indemnification clauses are often used to limit or expand on one party’s responsibility towards another. Limiting the parties’ liability reduces their risk exposure and protects them against potential losses and expenditure.
Typically, a standard form contract requires written notice for indemnification with respect to a specified event within a specified time, and often in relation to claims caused by negligence or breach of contract. Such clause may extend to claims for indirect, consequential, punitive, or exemplary damages. The party on whom an indemnification obligation is placed will want to limit their liability, often by limiting the types of claims that can be made or placing a monetary limit on their aggregate liability.
Indemnification provisions need to be read carefully. They can be drafted with very broad, imprecise, and even vague language, leaving the scope of indemnification unclear. This may result in a party being responsible for indemnifying in instances where they were neither responsible for the breach of contract or the negligence that arose. In such instances, it can be seen as “side-agreements” that are unrelated to the indemnifying party’s scope of work, and which make the indemnifier assume risks over which it will have no control. Properly drafted, however, the clauses are useful tools to manage claims between contracting parties. Many parties will want the scope of the indemnification to be mutual, in the sense that both parties will be indemnified by the other and to the same extent. However, the terms and conditions of indemnification can be customized to match the amount of risk each party is comfortable assuming.
A well-crafted indemnity clause can eliminate much of the risk associated with the unforeseen circumstances that may arise in a business agreement and ensure that all parties are adequately protected in case of a loss or dispute. Corporate lawyers, exemplified by the seasoned professionals at Blackburn Lawyers, specialized in offering such crucial support and advice, are adept at informing individuals about such terms and conditions that will ensure an efficient and effective outcome in their business agreements. For inquiries about indemnification clauses, we encourage you to reach out to our knowledgeable legal team today.
Disclaimer: This blog provides educational information on legal matters and is not tailored legal advice for individual situations. The author, Adriana Totera, emphasizes that the content is not intended as a source of legal advice. For personalized guidance, it is recommended to consult with a qualified lawyer.
Written by: Adriana Totera
* Please note that the information in this article is not intended as legal advice, but rather as a general overview on the subject. If you are seeking legal advice, please consult with a lawyer.
