Table of Contents
What does indemnify on demand mean?
In its simplest form, an indemnity is a promise to pay a particular amount should a particular liability arise. In order to claim, the indemnified party must simply show that the relevant trigger (i.e. a demand from HMRC for tax relating to a pre-completion period) has occurred and the amount of that liability.
What does failure to indemnify mean?
An indemnification provision allocates the risk and expense in the event of a breach, default, or misconduct by one of the parties. The primary benefit of an indemnification provision is to protect the indemnified party against losses from third party claims related to the contract.
What does an indemnity provision typically include?
A simple mutual indemnification provision will typically include several key factors: Language outlining the agreement to hold harmless , defend, and indemnify the other party against damage, cost, or loss of any kind. Details about third-party claims, the merit of those claims, and how processes will be handled.
What is an indemnity in a contract?
In its widest sense, “indemnity” means recompense for a loss or liability. Many indemnities are created by contract, under which the paying party promises to pay an identified loss. The trigger for payment and the amount payable depend on the contract’s drafting and interpretation.
What is an indemnity clause in a contract?
“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 party’s actions or failure to act. The intent is to shift liability away from one party, and on to the indemnifying party.
What is indemnity in a contract?
Indemnification, also referred to as indemnity, is an undertaking by one party (the indemnifying party) to compensate the other party (the indemnified party) for certain costs and expenses, typically stemming from third-party claims.
Why is indemnification important in a contract?
What does it mean to indemnify someone?
: to protect (someone) by promising to pay for the cost of possible future damage, loss, or injury. : to give (someone) money or another kind of payment for some damage, loss, or injury. See the full definition for indemnify in the English Language Learners Dictionary. indemnify. transitive verb.
What do you need to know about indemnity obligations?
• Indemnity is the obligation resting on one party (Indemnitor) to make good a loss or damage incurred by another party (Indemnitee). • The duty to indemnify can arise from: • Subcontractor cut a hole in metal decking & did not cover. • General Contractor was aware of hole and had another subcontractor cover it.
Which is the best definition of indemnification?
Indemnification is a legal agreement by one party to hold another party blameless – not liable – for potential losses or damages.
What happens when you indemnify a second party?
By indemnifying the second party, the first party, in effect, agrees to pay for or make good any loss or damages that may occur. In other words, by agreeing to make the indemnitee (the party that receives, or benefits from, the indemnity) NOT liable, the indemnitor (the party granting the indemnity) effectively agrees that he/she IS liable.
Who is held liable in an indemnification agreement?
An indemnity agreement frequently appears in the form of a terms of service (TOS) contract where the indemnitor, who is usually a customer of the indemnitee, agrees not to hold the indemnitee liable for any damage or loss that may arise as a result of the indemnitor using the indemnitees goods or services.