One encounters indemnification provisions so often in so many diverse agreements that it’s almost tempting to regard them as routine boilerplate. To do so would be a big mistake. For reference only, below is a basic indemnity provision.

Seller agrees to defend, indemnify and hold Buyer harmless from all claims, actions, losses, damages and attorney fees arising from any breach of this Agreement or any allegation that the Products infringe the intellectual property rights of any third party.

And, here are just a few points to consider.

1. Definition of Losses. Does the provision expressly refer to fines, penalties, punitive damages, consequential damages and attorney fees? Indemnity provisions tend to be strictly construed against the indemnitee. Depending on which party you represent, try to include – or exclude – as much as possible.

2. Trigger Event. Regardless of whether liability arises due to breach of warranty, IP infringement or something else, does the obligation arise upon a mere allegation, the filing of an action, or does it require a finding of infringement or wrongdoing? Continue reading →