This clause sets how much money the vendor will pay if their software causes you professional or financial harm—for example, if a bug causes you to give wrong advice to your clients and they sue you. "Indemnity" means the vendor agrees to cover your losses. The level (amount) is critical because it must match the maximum damage you could face. In the UK and US, vendors often cap indemnity at the fees you paid them, which may be far too low if your clients suffer major losses. This matters because without adequate indemnity, you personally bear the risk of the vendor's mistakes.
Calculate your maximum exposure: if one client sues you for losses caused by the software, what's the worst-case cost? Push the vendor to match that figure, or at least match your annual fees times 2–3 years. If they refuse, buy separate professional indemnity insurance to cover the gap—it's cheaper than negotiating with a stubborn vendor. ---
Frequently Asked Questions
What does this clause mean in simple terms?
This clause sets how much money the vendor will pay if their software causes you professional or financial harm—for example, if a bug causes you to give wrong advice to your clients and they sue you.
Why should I care about this clause?
"Indemnity" means the vendor agrees to cover your losses.
What are my options?
The level (amount) is critical because it must match the maximum damage you could face.
How does this affect small businesses?
In the UK and US, vendors often cap indemnity at the fees you paid them, which may be far too low if your clients suffer major losses.