Separate indemnities: Overview, definition, and example
What are separate indemnities?
Separate indemnities refer to distinct and independent clauses or provisions in a contract that allocate liability and responsibility for specific risks or losses between the parties. These indemnities are often included in agreements to ensure that one party (the indemnifying party) agrees to compensate or hold harmless the other party (the indemnified party) for losses, damages, or liabilities that may arise under specific circumstances. In the case of separate indemnities, each indemnity clause is tailored to cover different types of risks or events, allowing the parties to address various liabilities independently.
For example, in a service contract, one indemnity clause might cover damage to property caused by the service provider, while another indemnity clause might cover personal injury to third parties due to the service provider’s actions.
Why are separate indemnities important?
Separate indemnities are important because they provide clear boundaries for liability and ensure that each party understands the scope of protection or compensation offered. By creating specific indemnity provisions for different types of risks, the parties can negotiate and manage their respective exposures in a more targeted way. This can help reduce uncertainty and avoid disputes over which party is responsible for specific damages or losses. Separate indemnities also allow parties to address risks that are unique to particular aspects of a contract, such as property damage, personal injury, intellectual property infringement, or breach of confidentiality.
For businesses, separate indemnities allow for more granular risk management, enabling them to allocate responsibilities in a way that minimizes financial exposure and legal liabilities. For individuals, understanding separate indemnities ensures they are aware of the protections available and can make informed decisions about the risks they are taking on.
Understanding separate indemnities through an example
Imagine a construction contract between a contractor and a property owner. The contract includes separate indemnity clauses: one indemnity protects the contractor against claims for damages caused by the property owner’s negligence, while the other indemnity protects the property owner from any claims related to the contractor’s faulty workmanship or failure to meet safety standards. By separating these indemnities, both parties clearly understand the risks they are responsible for and how they will be compensated in the event of a claim.
In another example, a software development agreement might include separate indemnities, one covering the developer’s responsibility for infringing third-party intellectual property rights, and another addressing the developer’s obligation to cover any damages resulting from defects or errors in the software provided to the client.
An example of a separate indemnities clause
Here’s how a separate indemnities clause might appear in a contract:
“The Service Provider agrees to indemnify and hold the Client harmless from any and all claims, damages, or liabilities arising from the Service Provider’s negligence or willful misconduct. Additionally, the Client agrees to indemnify and hold the Service Provider harmless from any claims or damages arising from the Client’s failure to comply with applicable laws and regulations.”
Conclusion
Separate indemnities are distinct clauses within a contract that allocate specific risks and liabilities to the appropriate party. By addressing different types of risks independently, these provisions allow parties to more effectively manage and protect against potential losses. Whether it’s for property damage, personal injury, or intellectual property issues, separate indemnities provide clarity and help ensure that each party understands their obligations and protections. For businesses and individuals, using separate indemnities is an essential tool for negotiating contracts that fairly distribute risk and provide financial security in the event of a dispute or claim.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.