This clause requires one party to pay for the legal defense of the other party if a claim is made. For example, if a customer sues your client, this clause might require you to hire and pay for their lawyer. This matters legally because defense costs can exceed the actual damages—a single lawsuit can cost £50,000+ in legal fees before it's resolved. In US law, "duty to defend" clauses are strictly interpreted: if there's any possibility the claim falls within the clause, you must pay. In UK law, courts look at the exact wording.
Negotiate this carefully—it's expensive and open-ended. If you must accept it, add a cap on defense costs (e.g., "up to £100,000") and require written approval before the other party hires a lawyer. Insist on a clause stating that you have the right to control the defense and choose the lawyer, so you can prevent them from running up unnecessary bills. Also specify that the obligation ends once the claim is resolved or dismissed. ---
Frequently Asked Questions
What does this clause mean in simple terms?
This clause requires one party to pay for the legal defense of the other party if a claim is made.
Why should I care about this clause?
For example, if a customer sues your client, this clause might require you to hire and pay for their lawyer.
What are my options?
This matters legally because defense costs can exceed the actual damages—a single lawsuit can cost £50,000+ in legal fees before it's resolved.
How does this affect small businesses?
In US law, "duty to defend" clauses are strictly interpreted: if there's any possibility the claim falls within the clause, you must pay.