What is the purpose of an indemnity clause in a contract?
“To indemnify” means to compensate someone for his/her harm or loss. In most contracts, an indemnification clause serves to compensate a party for harm or loss arising in connection with the other party’s actions or failure to act. The intent is to shift liability away from one party, and on to the indemnifying party.
What is a reasonable indemnity clause?
It’s a clause that contractually obligates one party to compensate another party for losses or damages that have occurred or could occur in the future. California Civil Code § 2772 defines indemnity as.
What is indemnity settlement?
Indemnity is a comprehensive form of insurance compensation for damages or loss. In this type of arrangement, one party agrees to pay for potential losses or damages caused by another party.
What does indemnity agreement mean?
An indemnity agreement is a contract that protect one party of a transaction from the risks or liabilities created by the other party of the transaction. Hold harmless agreement, no-fault agreement, release of liability, or waiver of liability are other terms for an indemnity agreement.
Why is an indemnity better than damages?
When an indemnity clause appears in a contract, it’s standalone contractual promise which gives rise to the claim. It gives a better measure of recovery for loss than what would be available in the general law of damages. The liability is usually greater.
What is the basis of indemnity?
Indemnity Basis means all costs, including fees, charges, disbursements and expenses incurred by a party to litigation in taking steps to recover a debt, loss or damage and/or undertaking proceedings, provided they have not been unreasonably incurred or not of an unreasonable amount; Sample 2.
How do you write an indemnity clause?
“[Company/Business/Individual Name] shall fully indemnify, hold harmless and defend _______ and its directors, officers, employees, agents, stockholders and Affiliates from and against all claims, demands, actions, suits, damages, liabilities, losses, settlements, judgments, costs and expenses (including but not …
What happens when you indemnify someone?
To indemnify someone is to absolve that person from responsibility for damage or loss arising from a transaction. Indemnification is the act of not being held liable for or being protected from harm, loss, or damages, by shifting the liability to another party.
What is an indemnity clause in a contract?
For many reasons, one of the most contentious terms in any contract negotiation tends to be an indemnity clause. First, it’s an explicit definition of liability once fault is determined, and may even impose obligations before any formal determination of fault.
What is settlement of indemnity claims?
Settlement of Indemnity Claims. With respect to any Indemnity Claim —————————— relating solely to the payment of money damages and which could not result in the indemnified party becoming subject to injunctive or other equitable relief or otherwise adversely affect the business of the indemnified party in any manner, and as t…
Can the indemnified party settle an indemnity claim without consent?
The Indemnified Party may not settle or compromise any Indemnity Claim without the consent of the Indemnifying Party, which consent may not be unreasonably withheld or delayed.
What does defend mean in an indemnification clause?
If the word “defend” is included in an indemnification clause, it means that the contracted party that caused the harm is responsible for defending the indemnified party from lawsuits. However, many indemnified parties request that this word is left out so that they retain the right to defend themselves.