This clause makes one party promise to pay for legal costs and damages if a third person (someone outside the contract) sues the other party. For example, if you hire a contractor and they injure someone on your property, an indemnity clause might force you to pay the contractor's legal bills and any settlement. This is powerful because it can obligate you to defend someone else's mistakes. Courts in both the UK and US enforce these clauses strictly—they don't rewrite them just because they seem unfair.
Only agree to indemnify the other party for claims caused by YOUR actions or negligence, not theirs. Narrow the clause by adding language like "indemnify for claims arising solely from [your company's] breach" rather than accepting vague language like "any claim." Also require the other party to notify you quickly if a claim happens, so you can control how it's defended. ---
Frequently Asked Questions
What does this clause mean in simple terms?
This clause makes one party promise to pay for legal costs and damages if a third person (someone outside the contract) sues the other party.
Why should I care about this clause?
For example, if you hire a contractor and they injure someone on your property, an indemnity clause might force you to pay the contractor's legal bills and any settlement.
What are my options?
This is powerful because it can obligate you to defend someone else's mistakes.
How does this affect small businesses?
Courts in both the UK and US enforce these clauses strictly—they don't rewrite them just because they seem unfair.