The Overuse of Indemnities
This week’s musings on tech contracts… Many American IT contracts feature a strange clause. One party (usually the customer) asks the other for an indemnity against, “any third party claim resulting from SuspectCo’s breach of this Agreement,” or words to that effect. That indemnity doesn’t just cover claims about data incidents or personal injury or […]
Should the Limit of Liability Cover Indemnities?
This week’s musings on tech contracts… Contracting parties often debate whether the limit of liability should apply to indemnity obligations. IT contracts probably answer “no” more often than “yes.” But you can support either answer with good arguments. The Argument AGAINST Limiting Indemnity Liability The indemnity is unusual. It seems to address liability, but it […]
Your limit of liability might not work on your indemnity
The parties to IT contracts generally agree that the limit of liability (LoL) won’t apply to indemnities. After all, if one party takes responsibility for a third party lawsuit against the other – a tech contract’s typical third party indemnity – why would that responsibility suddenly end? If the vendor indemnifies against IP claims, for […]
Third Party Indemnities (in the Michael/Donald contract)
IT indemnities almost always address third party claims. That generates confusion, and contract-drafters often don’t even realize they misunderstand. Most clauses address the relationship between the parties. But in an indemnity against third party claims, the indemnitor isn’t liable to the other party (unless it breaches the indemnity). A third party indemnity is a no-fault […]
Don’t grant a fault-based indemnity
I think it’s a mistake to indemnify against claims resulting from indemnitor negligence or other wrongdoing. Indemnities against 3rd party claims usually specify the claims in question. They list IP claims, subcontractor compensation claims, or whatever. It doesn’t matter whether the indemnitor did something wrong under the typical clause. The vendor doesn’t just defend IP […]
LAST CHANCE to Register for Indemnities Webinar
Don’t miss your chance to register for Indemnities in Technology & Other Commercial Contracts. The webinar is on Tuesday, April 4th at 10:00 AM PT and runs for 90 minutes, with Q&A. Scheduling conflict? The recording will be available afterward for a limited time. (Details below). Presented by David Tollen, attorney, founder of Tech Contracts Academy® […]
Learn How to Draft and Negotiate Contracts with More Confidence
Writing and negotiating software and cloud computing contracts can be slow, risky, and intimidating, and few professionals receive effective formal training. We built Tech Contracts Academy® to bring confidence and expertise to you and to your deals. And next month brings our next training offerings. On April 4th, in Indemnities in Technology & Other Commercial Contracts we’ll do […]
There is no such thing as a mutual indemnity
Tech contracts use indemnities to address third party lawsuits. The indemnitor promises to defend a lawsuit against the indemnified party and to pay any judgments. (Those terms imply that the indemnitor will pay for settlements too — and many contracts make that explicit.) Given that structure, a “mutual indemnity” makes no sense. [We’ll discuss this […]
Should the Limit of Liability Cover Indemnities?
This article has been superseded by a more recent version. Please check it out. Contracting parties often debate whether the limit of liability should apply to indemnity obligations. IT contracts probably answer “no” more often than “yes.” But you can support either answer with good arguments. The Argument Against Limiting Indemnity Liability The indemnity is […]
New Clause Library!
We’re excited to announce that we’ve posted a complete new library of clauses here at TechContracts.com. ABA Publishing is about to release the 3rd edition of my book, The Tech Contracts Handbook, and the new clauses match those in the new edition. (The prior clause library matched the 2nd edition.) The new clauses included terms […]