indemnity clause

Meaning

This is a standard legal provision in a contract where one party promises to compensate the other for any financial loss, damage, or legal liability incurred. It is highly formal and commonly found in commercial agreements, leases, and service contracts to allocate risk. Using it incorrectly can lead to severe legal and financial consequences.

Examples

• Our legal team insists on including a robust indemnity clause to protect us from third-party lawsuits.

  Our legal team insists on including a robust indemnity clause to protect us from third-party lawsuits.

• Before signing the lease, make sure you understand the scope of the indemnity clause.

  Before signing the lease, make sure you understand the scope of the indemnity clause.

• The indemnity clause states that the vendor must cover any losses caused by software failures.

  The indemnity clause states that the vendor must cover any losses caused by software failures.

• We had to renegotiate the indemnity clause because the liability limits were far too high for our budget.

  We had to renegotiate the indemnity clause because the liability limits were far too high for our budget.

• Without a clear indemnity clause in the contract, we would be fully liable for any shipping delays.

  Without a clear indemnity clause in the contract, we would be fully liable for any shipping delays.

Common Mistakes

• ✗ The contract has an indemnification clause of liability.

  ✓ The contract has an indemnity clause protecting us from liability.

  While 'indemnification' is sometimes used, the standard collocations are 'indemnity clause' or 'indemnification provision' to protect against or from liability, not 'of' liability.

• ✗ We signed an indemnity clause to the supplier.

  ✓ We signed an agreement containing an indemnity clause in favor of the supplier.

  An indemnity clause is part of a contract, not a document you sign separately 'to' someone.

Related Expressions

Practice

• The lawyer advised us to draft a strong ___ to shield our company from potential intellectual property disputes.

  💡 A contract provision that transfers risk of loss from one party to another.

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  indemnity clause

• Under the terms of the ___, they must compensate us for any damage caused during the installation.

  💡 The specific contractual section dealing with compensation for loss.

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  indemnity clause