What does indemnification clause mean?
An indemnification provision allocates the risk and expense in the event of a breach, default, or misconduct by one of the parties. By Jennifer Paley. 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.
What is the best definition of indemnification?
Indemnity is defined by Black’s Law Dictionary as “a duty to make good any loss, damage, or liability incurred by another.” Indemnity has a general meaning of holding one harmless; that is to say, that one party holds the other harmless for some loss or damage.
Should you agree to indemnification clause?
Indemnification clauses are exceedingly common in many contracts, but what you should pay close attention to is the scope of your indemnification agreement. Generally, you should only agree to pay for losses arising from your own actions and not the other party’s actions.
How do you enforce an indemnity clause?
Tips for Enforcing Indemnification Provisions
- Identify Time Periods for Asserting Indemnification Rights.
- Provide Notice in a Timely Fashion.
- Notify All Concerned Parties.
- Understand Limitations on Recovery.
- Exclusive Remedy.
- Scope of Damages.
- Claims Process/Dispute Resolution.
Does indemnification mean you can’t sue?
If the indemnification provision is found to be valid, this usually means that the party has surrendered their right to damages in a lawsuit. However, if the indemnification provision actually wasn’t valid, then a lawsuit can actually be filed against the other party.
How does an indemnity clause work?
An indemnity clause is a promise by one party (the indemnifying party) to be responsible for and cover the loss of the other party (the indemnified party) in circumstances where it would be unfair for the indemnified party to bear the loss. In this way, an indemnity clause is a risk management tool.
What are the things that must be specified in an indemnity clause?
Indemnity clauses often set out a list of what actions a party is insured against, for example:
- All lawsuits, actions or proceedings, demands, damages and liabilities.
- All claims, liabilities, losses, expenses and damages arising from a contract.
How long should an indemnification agreement last?
six months to two years
Survival. Indemnification obligations survive closing – meaning the obligations remain in effect even after you close the deal and collect the purchase price. The survival period for the representations and warranties made in the purchase agreement usually ranges from six months to two years.
What is an indemnity clause and when is indemnity required?
Narrow the scope of your liability to the extent of your control.
Is “indemnify” and “hold harmless” the same?
While in legal circles, there may be some debate about the exact meaning of “indemnity” vs. “hold harmless”-some experts argue that “hold harmless” protects against both liability and losses, while “indemnity” protects only against losses-practically, they are one in the same.
What does it mean to be indemnified?
Indemnification means one party agrees to pay losses incurred by another to a third party.
What is an indemnity clause?
MMA president Dr Koh Kar Chai says that in the practice of medicine, it is compulsory to have an indemnity agreement. PETALING JAYA: The vaccination indemnity agreement that everyone has to sign is to enable them to receive compensation if the need arises