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Understanding the Indemnification Contract Clause

By Edited Mar 1, 2016 0 0

Indemnity Clauses Safeguard Parties in a Contractual Agreement

Indemnification clauses safeguard parties to a contract from potential legal matters when one party doesn't perform up to the required standards that are described in the agreement. Most contracts will have a mutual indemnification process whereas both parties agree to defend and hold the other party, its directors and employes and other connected parties harmless from/against any and all damages, demands expenses, liabilities, losses and lawsuits and judgements that include lawyer fees and other costs/expenses that may arise out of the performance of the contract. Basically, this clause says "if one party messes up and ends up getting sued they will protect the other contractual party that is part of the contract.

The key with drafting up an indemnification clause is to make sure that you include protection for yourself or organization if something should happen with the other party getting themselves into a legal matter. You shouldn't be responsible for the other parties action. You could also had that any violations of Federal, Local and State laws, sexual harassment, copyright infringements into the protection part of the indemnification clause. Just make sure you include otherlike protections that you can think of as it relates to the specific contract. The whole key to the indemnification clause is to put the risk back on the party performing the contract.

Always make sure that when you have a contractual agreement with another party that you have some type of indemnification clause in the contract. You don't want to be responsible for another parties actions and you sure don't want to foot the legal bill for another parties screwup. if the other party refuses to accept responsiblity for their performance in a contract you may want to reconsider if you really want to have a contractual agreement with them. This clause is somewhat standard in most contracts, so be sure to make it a part of any contract you draft up. This contract clause is usually one of the common negotiated terms within a contract because no one party wants full responsiblity for their actions because somethings such as the word incidental can be interpreted in a variety of different ways.

Just remember when reviewing an indemnification clause you want to be responsible with the other party. This is where the mutual indemnification is included where both parties will protect the other party from any action brought forth due to some issue by the first party.

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