What does an indemnification clause do?
Often contracts contain clauses to the effect that “each party shall defend, indemnify and hold harmless the other party from and against any and all claims, actions, suits, demands, or judgments asserted, and any and all losses, liabilities, damages, costs, and expenses, including, attorneys’ fees alleged or incurred arising out of or relating to any operations, acts, or omissions of the indemnifying party”. Translation: If one party (Party A) to the contract causes a third party to make a claim against the other party to the contract (Party B), then Party A agrees to pay the attorney’s fees, costs, expenses and any damages involved in defending the claim.
The things the indemnifying party could do that would result in liability to the indemnified party are listed at the end of the provision (essentially acts or omissions under the agreement). This provision requires that the indemnified party promptly notify the indemnifying party of a claim and allow that party to control the defense or settlement of the claim. An indemnification provision addresses the risk that your company might be liable for damages resulting from something the other party does related to the contract.
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