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As a business owner, it`s essential to protect your company from any potential legal disputes that may arise. One way to minimize risks is by having an indemnity agreement in place. An indemnity agreement is a contract between two parties that outlines the responsibilities and liabilities in the event of a legal dispute. Typically, this agreement transfers responsibility for losses and damages from one party to another.

While indemnity agreements can be beneficial, they are also complex legal documents that require careful review and consideration. Here are some things to keep in mind when reviewing an indemnity agreement:

1. Understand the Scope of Indemnification

Indemnity agreements can be broad or limited in scope. Some indemnity agreements cover all damages, including those caused by the indemnified party, while others only cover damages caused by the indemnifying party. It`s essential to read the agreement carefully to understand the scope of the indemnification.

2. Review the Wording Carefully

The language used in the indemnity agreement is critical. Make sure to review the wording carefully and ensure that you understand what each clause means. Don`t hesitate to seek legal counsel if you need help understanding the terminology used in the agreement.

3. Check for Exclusions

Most indemnity agreements have exclusions that limit the scope of indemnification. These exclusions can include damages caused by intentional acts, gross negligence, or breaches of the agreement by the indemnified party. It`s essential to ensure that these exclusions are reasonable and fair.

4. Determine the Allocation of Risk

Indemnity agreements allocate risk between the parties involved. This allocation of risk can be equal or unequal. Make sure to review the agreement to understand how risk is allocated and whether it`s fair for your business.

5. Negotiate the Terms

Indemnity agreements are often negotiable. If you feel that the terms of the agreement are not fair, don`t hesitate to negotiate. Make sure to consult with legal counsel before making any changes to the agreement.

In conclusion, indemnity agreements are vital legal documents that require careful review and consideration. As a business owner, it`s essential to understand the scope of indemnification, review the wording carefully, check for exclusions, determine the allocation of risk, and negotiate the terms if necessary. A well-drafted indemnity agreement can provide your business with valuable protection in the event of a legal dispute.

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