What is an “Indemnification Provision” in a Contract?

March 22, 2023by Jeffrey Davis

An indemnification provision in a contract is a clause that outlines the responsibility of one party to compensate the other party for certain losses or damages that may arise from the contract or from the performance of the contract.

The indemnification provision usually specifies the types of losses or damages that are covered, such as claims, liabilities, damages, expenses, and legal fees, and it typically requires the indemnifying party to defend, indemnify, and hold harmless the other party against any such losses or damages.

For example, in a construction contract, the contractor may agree to indemnify the property owner against any claims, liabilities, and damages arising from the contractor’s work on the property. Similarly, in a software licensing agreement, the licensor may agree to indemnify the licensee against any claims of infringement of intellectual property rights related to the software.

Indemnification provisions are common in many types of contracts, and they help to allocate the risk of loss between the parties involved. It is important to carefully review and negotiate the terms of any indemnification provision in a contract to ensure that they are fair and reasonable for both parties.