Indemnification Clause
Indemnification is one of the highest financial risks in any contract. An uncapped or one-sided indemnity can force a small company or contractor into bankruptcy to defend a lawsuit filed against a giant corporate partner.
Plain-English Definition
An indemnification clause (also called a 'hold harmless' provision) is a contractual agreement where one party promises to pay for legal costs, damages, or settlements incurred by the other party from third-party lawsuits.
Standard vs. Protective Language
Compare typical counterparty-favored phrasing against our attorney-approved balanced alternative.
⚠ Often leaves you exposed to uncapped liabilities or third-party indemnities without defense control.
Dangerous Red Flags in this Clause
If you spot any of these phrases or omissions in your contract, pause and propose counter-language immediately:
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Frequently Asked Questions
Should indemnification be mutual or one-way?
In almost all commercial contracts, indemnification should be mutual. If you are required to indemnify the counterparty for IP infringement or breach, they should reciprocate by indemnifying you for claims caused by their platform, staff, or materials.
Is indemnification capped by limitation of liability?
By default, counterparties often try to carve out indemnification from liability caps. Best practice for vendors and contractors is to ensure indemnity is either subject to the general cap or a negotiated 'super-cap' (e.g. 2x annual contract value).
Agreements Containing This Clause
Commercial and employment contracts where the Indemnification Clause is routinely included and negotiated.
SaaS Agreement & Master Terms of Service
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Master Consulting Services Agreement (MSA)
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Freelance & Independent Contractor Agreement
Protect your freelance business: payment schedules, kill fees, scope creep defense, IP transfer upon payment, and liability caps.
Related Companion Clauses
When redlining this provision, review these related clauses to prevent unintended liability shifts.
Limitation of Liability (LoL)
A Limitation of Liability clause caps the maximum financial exposure either party can face in a lawsuit and disclaims indirect, punitive, and consequential damages (like lost profits).
Termination Clause (Cause & Convenience)
The termination clause specifies how, when, and why a contract can be brought to an end—including termination for cause (breach) and termination for convenience (without reason).