What It Does
An indemnification clause moves the cost of a defined risk from the party that would otherwise bear it to the party that agrees to cover it. For in-house counsel, it answers a concrete question: if a third party sues over something connected to this contract, who pays the lawyers and the judgment? The clause does three things at once. It defines which claims are covered, it sets whether the indemnitor must also defend, and it fixes the procedures and limits that govern how the obligation works in practice.
When You'll See It
An indemnification clause appears in nearly every substantive commercial contract: vendor and supply agreements, SaaS and technology contracts, M&A purchase agreements, licensing deals, and professional services engagements. In M&A it is the core risk-allocation mechanism, paired with caps, baskets, and escrow. In commercial contracts it sits beside the limitation of liability and warranty provisions. The negotiation turns on scope (which claims), direction (one-way or mutual), and whether the duty to defend is independent. See also: limitation of liability, representations and warranties, and insurance.
Examples
Caterpillar Inc. / Suzette M. Long
Consulting Agreement
Mutual, with duty to defend
Mutual
2024
"Each party shall indemnify, defend, and hold harmless the other party, along with its affiliates, directors, officers, employees and agents from and against any and all suits, claims, demands, losses, damages, costs and expenses of any nature whatsoever, including without limitation litigation expenses, attorney's fees and liabilities incurred in connection therewith arising out of: (i) injury to, or death of, any person whatsoever or damage to property of any kind..."
Source
Blue Star Foods Corp. / Low Tide, LLC
Vendor Agreement
Breach and negligence
One-Sided
2024
"BSFC shall and does hereby indemnify, protect, defend and hold LT harmless from and against all direct damages, including reasonable attorneys' fees incurred, arising against, or suffered by LT resulting from: (i) the breach of any representation or warranty of BSFC set forth in this Agreement; (ii) the failure of BSFC to perform any material obligation required by this Agreement; or (iii) BSFC's negligence or misconduct. This indemnity shall survive the expiration or termination of this Agreement."
Source
Deerfield Campbell LLC / Sight Sciences, Inc.
First Amendment to Multi-Tenant Industrial Triple Net Lease
Broker indemnity
One-Sided
2024
"Landlord hereby agrees to and shall indemnify, defend and hold harmless Tenant from and against any and all claims, liabilities, causes of action, damages, including reasonable attorneys' fees and costs, arising out of any claims or causes of action which may be asserted against Tenant by any other broker, finder, or other real estate agent with whom Landlord has purportedly dealt..."
Source
Sandoz Inc. / RareGen, LLC
Third Amendment to Promotion Agreement
Breach of reps
One-Sided
2022
"Indemnification by Sandoz. Sandoz shall defend, indemnify and hold harmless RareGen and its Affiliates and its and their respective officers, directors, employees, agents, representatives, successors and assigns from and against all Claims, and all associated Losses, to the extent incurred or suffered by any of them to the extent resulting from or arising out of (a) any misrepresentation or breach of any representations, warranties, or covenants ... of Sandoz under this Agreement..."
Source
Fresh Tracks Therapeutics, Inc. / Botanix SB Inc.
Amendment No. 1 to Asset Purchase Agreement
Third-party claims
Mutual
2023
"Indemnification by the Sellers. The Sellers, jointly and severally, shall indemnify, defend and hold harmless Buyer, Guarantor, their respective Affiliates and officers, directors, agents and employees from and against any Third Party Claims and Losses arising therefrom to the extent resulting from any breach of representation, warranty or covenant of either or both of the Sellers set forth in this Amendment."
Source
Negotiate
You want broad protection
Cover third-party claims arising from the other party's breach, negligence, and IP infringement, at a minimum.
Require a duty to defend that is separate from the duty to indemnify, so the indemnitor funds the defense as it goes.
Carve indemnification out of the liability cap, or give it a higher dedicated cap.
Keep your notice obligation reasonable; a short delay should not forfeit the indemnity unless it actually prejudiced the defense.
Add an IP-infringement indemnity with a remedy obligation: procure a license, modify, or refund.
You want to limit exposure
Limit covered claims to third-party claims, and exclude first-party losses between the parties.
Condition the obligation on prompt written notice and your control of the defense.
Cap the indemnity, or fold it under the general liability cap.
Exclude claims arising from the indemnitee's own negligence or unauthorized modifications.
Tie the obligation to a closed list of triggers rather than open-ended "any and all claims."
Indemnities are won and lost on scope and defense. The word "indemnify" is the easy part; read which claims are covered and who controls the lawyers before anything else.
Red Flags
An indemnity that reaches first-party losses, turning a third-party-claims clause into a general guarantee.
A duty to indemnify with no duty to defend, leaving you to fund the defense and recover later, if ever.
An indemnity capped under the same low liability ceiling as everything else.
"Any and all claims" with no carve-out for the indemnitee's own negligence or misuse.
Notice provisions that forfeit the entire indemnity for a brief delay, regardless of prejudice.
FAQs
Related Clauses
Limitation of Liability
A contractual provision that caps the amount and types of damages one party can recover from the other.
Force Majeure
A contractual provision that excuses performance when an extraordinary event prevents one or both parties from fulfilling their obligations.
Confidentiality
A contractual provision requiring one or both parties to keep specified information secret and use it only for an agreed purpose.
Survival
A contractual provision that keeps specified obligations enforceable after the agreement expires or is terminated.
Representations and Warranties
A set of factual statements each party makes about itself and the deal, which the other party relies on and can sue over if they prove untrue.
Assignment
A contractual provision that controls whether a party can transfer its rights or obligations under the contract to a third party.
This content is for informational purposes only and does not constitute legal advice.