Indemnity clause in it contracts

Is indemnity a remedy for breach of contract? In these clauses, one party will indemnify the other party for all loss or liability related to. This clause states that one of the parties (Indemnifying Party) promises to defend and pay costs and expenses for the other party (Indemnified Party) under certain circumstances.

One rationale for including such a clause is the belief by the Indemnified Party that the contract subjects him to some risk of loss or expense by a claim which might be made by some third party. An indemnification provision, also known as a hold harmless provision, is a clause used in contracts to shift potential costs from one party to the other.

In a mutual indemnification, both parties agree to compensate the other party for losses arising out of the agreement to the extent those losses are caused by the indemnifying partys breach of the contract. In a one-way indemnification, only one party provides this indemnity in favor of the other party. The primary benefit of an indemnification provision is to protect the indemnified party against losses from third party claims related to the contract. Indemnification provisions are generally heavily negotiated (and often heavily litigated) clauses.

They are typically used in agreements where the risks associated with a partys non-performance, breach, or misconduct are high. For example, agreements that involve the sale of intellectual property rights often include an indemnification by the seller in order to protect the buyer against the potentially large liability associated with an infringement lawsuit by a third party. See full list on nolo.

The following is an example of a basic mutual indemnification provision.

Remember, any indemnity must be tailored to your specific needs. Lets say you commission a writer to prepare a speech for you on a work-for-hire basis. Instead of delivering an original speech as promised under the contract, the writer incorporates passages from a speech by another person who then sues you for copyright infringement, claiming that his intellectual property was exploited without his consent.

Your agreement with the writer includes a representation and warranty that the work product provided under the contract is original. It also has a standard indemnification provision that promises to hold you harmless from any losses or damages, including attorney fees, incurred as a result of any breach of the agreement. Pursuant to the indemnity , the writer would be obligated to handle the legal defense related to the other writers intellectual property infringement lawsuit against you and cover all of the losses and expenses you incur as a result of the infringement claim. You would want to include additional language depending on your circumstances. For example, an indemnification can be limited to specific third party claims (such as those related to a breach of warranty), or restricted to only those situations where a lawsuit has been filed or a final judgment has been rendered.

If you are the party providing the indemnification, you will want to make sure the clause is as narrowly tailored as possible to protect against the specific risk it is intended to protect against. There are certain exceptions however. Certain states also prohibit indemnification provisions that provide for punitive damages.

Check all applicable laws before drafting an indemnity. Additionally, courts have commonly held that a plaintiff may not recover damages under an indemnity clause to the extent that the damages are an unforeseeable and improbable outcome of the other partys breach, negligence, or misconduct (unless it can be shown that the indemnifying party had knowledge of the relevant circumstances). They should be broad enough to sufficiently address the parties concerns, yet reasonable and equitable in all respects so that their enforceability is not called into question. In most cases, these clauses are used to make sure that a potential loss will be compensated.

If you are the party covered by this clause, it means that the other contractual party is promising to compensate you if their actions cause you to suffer a loss.

Broadly, and indemnity is a compensation payment or an obligation to make a compensation payment. Should you include an indemnity in your IT contract ? What is an indemnity ? And if so, what sort of indemnity ? Whether it is appropriate to include an indemnity in a given contract will depend upon a range of factors. Indemnities in IT contracts come in different shapes and sizes.

They are particularly useful when the actions of one party are likely to create a risk which the other party would otherwise have to bear. For example, indemnity clauses or agreements in construction contracts are an attempt to protect the contractor from lawsuits and losses due to negligence. IT Supplier was not going to provide an.

The Warrant Agent shall be liable hereunder only for its own gross negligence, willful misconduct or bad faith. The Company agrees to indemnify the Warrant Agent and save it harmless against any and all liabilities, including judgments, costs and reasonable counsel fees, for anything done or omitted by the Warrant Agent in the execution of this Agreement, except as a result of the Warrant Agent’s gross negligence, willful misconduct or bad faith. Instant Downloa Mail Paper Copy or Hard Copy Delivery, Start and Order Now! Secure Cloud Storage. No Installation Required.

Kurtz (Kurt) Holloway. An indemnity clause, also known as an indemnification clause, is a standard waiver clause that states that one party won’t hold the other liable for damages, losses, or costs associated with incurred legal issues. For liability waivers, these potential costs are typically the loss, damages, or other legal costs that would arise from a lawsuit. In some cases, indemnity clauses also strive to be implemente even in the absence of a violation of the contract by that party.

A commonly known example of this is a guarantee where one person indemnifies another person for the act, breach, or default of a third party. The other type of contractual indemnity is concerned with the amount of compensation that may be paid in the event of a breach of contract. In a standard action for breach of contract, the amount of money that may be recovered by the claimant is limited by various legal filters, such as forseeability and remoteness. An indemnity is also known as a ‘hold harmless’ clause as one party agrees to hold the other party harmless. The danger, however, is when the clause is more extensive than the party thought when they entered into the agreement.

Each Party shall defend indemnify and hold harmless the other Party, including Affiliates and each of their respective officers, directors, shareholders, employees, representatives, agents, successors and assigns from and against all Claims of Third Parties, and all associated Losses, to the extent arising out of (a) a Party’s gross negligence or willful misconduct in performing any of its obligations under this Agreement, or (b) a material breach by a Party of any of its representations. Indemnity clauses effectively allocate risk between the parties. Get Approved Legal Docs - 1 Free!