Indemnification Contract Template
Looking for a Indemnification Contract template? Our team has drafted a simple, easy to understand, and easy to customize Indemnification Contract template. Download the contract ( in Word or PDF) and save your precious time in business.
Free Indemnification Contract Template Samples
To help you grow your business we have made a quite simple yet reliable Indemnification Contract template in Word and PDF versions so you can use it repeatedly.
What Is an Indemnification Contract?
An indemnification contract clause is an agreement of one party to assume the liability in the event of a loss.
An indemnification contract clause is an agreement of one party to assume the liability in the event of a loss. This generally involves shifting the risk from one party to the other.
What Is Indemnity?
Indemnity is one’s duty to make good the liabilities, damages, or losses that are incurred by another party. The general meaning of indemnity is to hold harmless, one party holds the other harmless for damage or loss.
There are some variations for the meaning of indemnity, including the right of an injured party to claim compensation or reimbursement for damages or losses. It may also refer to compensation for damages resulting from another party’s actions or a legal exemption from damages or losses.
Why do I need an indemnity clause?
Indemnity clauses are used to manage the risks associated with a contract, because they enable one party to be protected against the liability arising from the actions of another party. 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, suppose a manufacturer sells products to a retailer. The retailer may fear that, if the products are defective, it will be exposed to product liability claims by consumers. The retailer will usually seek an indemnity from the manufacturer against those claims, in order to be compensated if such claims arise.
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When to give an indemnity?
Indemnities are used in a wide variety of contexts and there is no general rule about when to give an indemnity. It depends mostly on the circumstances of the contract (eg if the contract is a high risk contract), the parties’ willingness to do so and their relative bargaining positions. A party who is in a stronger negotiating position is more likely to ask for an indemnity from the other party, whereas a party in a weaker position is less likely to ask for an indemnity.
It may be useful to seek an indemnity when:
- one of the parties is likely to suffer a loss from a commercial transaction
- the remedies available with a pure damage claim would not be sufficient to cover the loss suffered
Examples of contracts where indemnities can be used include:
- assignment of intellectual property rights: when assigning IP rights to someone, the assignor often gives the assignee an indemnity against loss they may suffer from defects in those rights
- software licensing agreements: when a software developer grants a company the right to use its software, there is usually an indemnity clause to protect the company against any liability arising from the use of the software, for example in the event of claims from third parties (eg if the company gets sued because the software was copied from a third party)
- share purchase agreements: when buying shares, the buyer often seeks an indemnity against tax liabilities of the target company
On the contrary, indemnities should be avoided in certain contracts:
- confidentiality agreements: an indemnity for breach of contract in a confidentiality agreement should be resisted as it will potentially increase the liability of the party who’s receiving confidential information, allowing the disclosing party to recover for all liabilities, costs, claims and expenses incurred in connection with the breach, as opposed to the loss it actually suffers
- consumer contracts: indemnities paid by a consumer to a business are generally deemed unfair and are prohibited
Frequently Asked Questions
FAQ about our Indemnification Contract Templates
we recognize that your contract layout conditions may need to be changed to be in line together with your client’s needs. That’s why we have made Contrat in Word format as well so that you’ll be able make adjustments as you like. If you want to make important changes to the template, we propose you to get help of a lawyer or conveyancer to make sure you still have protection.