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Indemnity is defined by statute in California as a contract by which one engages to save another from a legal consequence of the conduct of one of the parties, or of some other person.[1] In other words, one party (known as the indemnitor) agrees to be responsible for certain liabilities of another party (known as
Indemnification clauses are clauses in contracts that set out to protect one party from liability if a third-party or third entity is harmed in any way. Its a clause that contractually obligates one party to compensate another party for losses or damages that have occurred or could occur in the future.
To indemnify means to compensate someone for his/her harm or loss. In most contracts, an indemnification clause serves to compensate a party for harm or loss arising in connection with the other partys actions or failure to act.
An indemnity agreement is a contract that protects one party of a transaction from the risks or liabilities created by the other party of the transaction. Hold harmless agreement, no-fault agreement, release of liability, or waiver of liability are other terms for an indemnity agreement.
Why are indemnification provisions important? Indemnification clauses allow a contracting party to: Customize the amount of risk it is willing to undertake in each transaction and with every counterparty. Protect itself from damages and lawsuits that are more efficiently borne by the counterparty.

People also ask

In the B2B world, loan indemnity is a valuable protection against the sudden inability to repay a mortgage or loan. For example, if a borrower suffers a disabling event that impairs their ability to pay their secured debt, like a mortgage, their loan indemnification clause kicks in to pay the debt.
Put simply, indemnity is a contractual agreement between two parties, where one party agrees to pay for potential losses or damages claimed by a third party.
An indemnification clause may allow: The indemnified party to recover certain types of losses, such as attorneys fees, which are not typically recoverable under a common law cause of action. The indemnifying party to reduce its liability by incorporating: Liability cap.
Section 145(a) of the DGCL empowers a corporation to indemnify its directors against expenses, judgments, fines, and amounts paid in settlement incurred in connection with actions other than those brought by or in the right of the corporation, subject to a determination that the indemnitee has met the requisite
Generally, you should only agree to pay for losses arising from your own actions and not the other partys actions. If you want to draw a stricter line, you could negotiate an indemnification provision that only holds you liable for gross negligence and willful misconduct, and not simple negligence.

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