indemnities

Indemnities are contractual arrangements in which one party agrees to compensate and hold harmless another party for specified losses or damages arising from defined events or circumstances. An indemnity differs from insurance in that it is a direct promise within a contract rather than a separate policy; it is a mechanism for allocating risk between the parties to a transaction, project, or service.

A typical indemnity clause identifies who is protected (the indemnitee), who bears the liability (the indemnitor), and the scope of covered losses. It may cover third‑party claims, legal costs, fines, penalties, and other liabilities arising from acts, omissions, or events for which the indemnitor is responsible. The clause often includes practical details such as notice requirements, control of defense, cooperation obligations, subrogation rights after payment, and any monetary caps or baskets that limit overall exposure.

Common indemnity contexts include mutual indemnities in commercial agreements; vendor or supplier indemnities; professional indemnities for consultants or contractors; and indemnities addressing intellectual property infringement or product liability. Exclusions frequently apply to indirect or consequential damages, punitive damages, breaches of contract, or acts of gross negligence or willful misconduct, and many agreements impose liability caps or other limits.

Enforceability of indemnities varies by jurisdiction and may be subject to anti‑indemnity statutes or public policy concerns, especially where negligence is involved. Indemnities are typically considered alongside limitation of liability and insurance provisions in a contract, creating a layered risk allocation framework.