Indemnity Clause

In one sentence

A contract provision requiring one party to compensate the other for losses, damages, or legal costs arising from specified events.

Plain English

An indemnity clause is a promise by one party to cover the other party's losses, damages, or legal expenses if something goes wrong. For instance, a contractor might agree to indemnify (compensate) the property owner for any injuries that occur on the job site. Indemnity is broader than simple damages; it can include legal fees, court costs, and settlements. The party providing indemnity is called the indemnitor, and the party receiving protection is the indemnitee.

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Example

A catering company's contract includes an indemnity clause stating that the caterer will pay for any food poisoning claims, medical bills, and legal fees arising from their food service at an event.

Used in a sentence

“The contractor's indemnity clause protected the homeowner from liability if workers were injured during renovation.”

Related terms

Hold Harmless Agreement

A contract clause in which one party agrees to protect the other from legal liability and financial loss.

Breach of Contract

Failure to do what a contract requires, without a valid legal excuse.

Good Faith and Fair Dealing

A legal duty to act honestly and fairly when making and performing contracts.

Consideration

Something of value exchanged by each party to make a contract binding.

Entire Agreement Clause

A contract provision stating that the written agreement is the complete and final deal between parties.

Offer

A proposal to enter into a binding agreement on specific terms.

Acceptance

Agreeing to the exact terms of an offer, creating a binding contract.

Offeror

The person who makes an offer to enter into a contract.

This page is a plain-English reference and is not legal advice. Laws vary by jurisdiction and change over time. For specific situations consult a licensed attorney.