Change period in the Indemnification Agreement

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How to Change period in the Indemnification Agreement

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hi Im Michele welcome back to finally revealed in this section weve been going over different types of terms that you may or may not know what they mean or how theyre used today I want to talk about another one of those terms and this is indemnification to indemnify or to provide an indemnification sometimes comes up in a context where youre signing a contract youre making a settlement or you are separating maybe in a business youre going your own ways or you are selling someone something or theyre selling something to you to indemnify someone means to in common terms cover their back means that you are going to step up for them and you are going to take care of them and any claims that are made against this person for the circumstance described for the product thats being sold or otherwise as is explained now to be responsible for the indemnification it should be clear what it is that you are indemnifying them against is it a something that if something goes wrong is it for a

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What is a typical indemnification clause?

A typical indemnification clause consists of two separate and distinct obligations: an obligation to indemnify, and an obligation to defend.

What is the limitation period for an indemnity clause?

It is critical to understand that the limitation period in relation to an indemnity clause starts from the date on which the indemnifier refuses to honour the indemnity. The indemnified party would then have a further 6 years from that date within which to bring legal proceedings to enforce the indemnity.

How do you limit an indemnification clause?

You should look to limit indemnification clauses by narrowing their scope, putting in caps on damages, and clearly defining the indemnifiable acts (i.e. the representations and warranties in the example above). Also consider purchasing insurance as a means to limit your financial risk.

What is the limit on indemnification?

A cap (also called a limitation of liability) on indemnification limits indemnifiable damages to a maximum amount, i.e., $500,000. Certain fundamental representations and warranties such as those concerning existence, authorization, taxes, employment matters and broker fees may be carved out of the cap.

How do you narrow an indemnity clause?

If you are giving the indemnity, you will try to limit its scope by: Narrowing the scope of your liability to the extent of your control (ability to prevent the resulting harm). For example, if the harm was caused because someone else misused or altered the widget, you should not be responsible.

How long should indemnification last?

Indemnification obligations survive closing meaning the obligations remain in effect even after you close the deal and collect the purchase price. The survival period for the representations and warranties made in the purchase agreement usually ranges from six months to two years.

Do indemnity agreements expire?

The answer is often no. While indemnity obligations can survive indefinitely after a closing, in practice, many are negotiated to a limited time period after closing. The indemnified party will not be able to seek indemnity from the other party after the time period has expired.

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