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 […]

Insurance companies give nuclear indemnities; tech vendors should not

This is what I call a nuclear indemnity: “Vendor shall indemnify Customer against any third party claim arising out of or related to Vendor’s breach of this Agreement.” It’s nuclear because it destroys all in its path. It’s not limited to a type of claim, like IP, data breach, or personal injury. Tech vendors should […]

IP Indemnity Exception: “Registered after the Effective Date”

Some intellectual property indemnities exclude claims about IP registered after the contract’s effective date. The tech provider argues that it shouldn’t be responsible for IP it didn’t know about when it created its product — or at least when it signed the contract. “If we couldn’t have known about that IP, it’s not our fault […]

Limits of Liability Don’t Work for Indemnities

Contracting parties often debate whether the limit of liability should apply to indemnities. But few notice the problem. Even if the contract specifically says the limit applies to an indemnity … it doesn’t. The indemnity obligation remains unlimited. I’m serious. An Indemnity Is Just Another Obligation to Perform (in IT Contracts) Contrary to common belief, […]

Announcing The Tech Indemnities Pocket Guide

I’m excited to announce the publication of my new e-book, THE TECH INDEMNITIES POCKET GUIDE: Indemnities in Software and Other IT Contracts for Lawyers and Businesspeople (ABA Publishing 2020 – IP Section). There is nothing on the market like this book. Businesspeople and lawyers argue over indemnities more — and understand them less — than […]

Open Source in Software Procurement – 4. IP Indemnities

By David W. Tollen This is the fourth in a series of five posts on Open Source in Software Procurement. Click here for the prior post, and click here for the intro, which lists all five topics. In most cases, the licensee does not need an “open source indemnity.” It doesn’t need terms specifically addressing copyleft open source […]