This clause requires you to pay for and defend the other party against legal claims, even if those claims aren't your fault. For example, an indemnity clause might say you must cover their legal costs if a customer sues them—even if the problem was caused by their own negligence, not your work. Indemnity is different from liability: with liability, you pay damages; with indemnity, you also pay their legal fees and defense costs, which can be enormous. Courts in the UK and US enforce indemnity clauses strictly, so you need to understand exactly what you're agreeing to cover.
Narrow the indemnity to cover only claims caused by *your* negligence or breach—not claims caused by the other party's actions or circumstances beyond your control. Add language like "indemnity applies only to claims arising directly from [your company's] breach of this agreement" and exclude claims caused by the other party's modification of your work or failure to follow your instructions. Push back hard on indemnity for third-party claims unless you have professional liability insurance that covers it. ---
Frequently Asked Questions
What does this clause mean in simple terms?
This clause requires you to pay for and defend the other party against legal claims, even if those claims aren't your fault.
Why should I care about this clause?
For example, an indemnity clause might say you must cover their legal costs if a customer sues them—even if the problem was caused by their own negligence, not your work.
What are my options?
Indemnity is different from liability: with liability, you pay damages; with indemnity, you also pay their legal fees and defense costs, which can be enormous.
How does this affect small businesses?
Courts in the UK and US enforce indemnity clauses strictly, so you need to understand exactly what you're agreeing to cover.