What Is Indemnification?

Indemnification clauses vary widely in scope: broad indemnities cover any losses arising from the agreement; narrow ones cover only losses caused by the indemnitor's negligence or willful misconduct. Key negotiation points include: whether the obligation covers third-party claims only or also direct losses; whether gross negligence or intentional acts are excluded; whether there are caps on indemnification liability; and whether the indemnitor has the right to control defense of claims. Mutual indemnification provisions (each party indemnifies the other for its own acts) are common in commercial agreements. Unilateral, uncapped indemnification obligations are a significant contract risk — particularly in software, services, and IP agreements where scope of liability can be unpredictable. Courts in some states require explicit language for indemnification to cover a party's own negligence.

Indemnification clauses can expose you to unlimited liability or leave you unprotected depending on how they're drafted. Before signing any agreement with broad indemnification language — particularly IP infringement indemnities, professional services agreements, or vendor contracts — a contract attorney can identify the risk exposure and negotiate appropriate caps and carve-outs.