Clause guide
Indemnification Clause clause: meaning, risks, and what to negotiate
Requires one party to compensate the other for certain losses or claims.
What it means
Indemnification clauses can transfer significant financial risk between parties.
Common risks
- • The indemnity may be too broad.
- • It may cover third-party claims without limits.
- • Costs may include legal fees and damages.
What to check before signing
- • What events trigger indemnification?
- • Are there caps or limits?
- • Does it apply equally to both parties?
Negotiation ideas
- • Limit indemnification scope.
- • Add liability caps.
- • Ensure mutual indemnification.
Example clause
“Each party agrees to indemnify and hold harmless the other from claims arising from its breach of this Agreement.”
Frequently asked questions
What does indemnification mean?
It means one party must compensate the other for certain losses or legal claims.
Related clauses
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