Services by indemnitee: Overview, definition, and example
What are services by indemnitee?
Services by indemnitee refer to work, duties, or obligations performed by a party who is also protected under an indemnity clause. In a contract, an indemnitee is the party that receives protection from financial loss or legal liability, usually through an indemnification clause. If the indemnitee provides services under the agreement, the contract may clarify how indemnification applies to those services.
For example, if a contractor provides consulting services and the client agrees to indemnify them against third-party claims, the contract may specify which services are covered by the indemnification.
Why are services by indemnitee important?
Defining services by indemnitee in a contract helps prevent disputes over what is covered under an indemnity clause. Without clear terms, a party might assume they are protected for all actions, even those beyond the agreed-upon services. A well-drafted contract ensures that indemnification applies only to specific services and does not extend to misconduct or negligence.
For businesses, this protects both parties—the indemnitor (who provides indemnity) understands their obligations, and the indemnitee knows what risks are covered. This prevents unfair liability and ensures both sides are aware of their responsibilities.
Understanding services by indemnitee through an example
Imagine a company hires an IT consultant to manage its cybersecurity systems. The contract includes an indemnity clause stating that the company will protect the consultant from legal claims related to their services. However, if the consultant provides advice on financial matters outside their IT role, the contract may specify that those services are not covered under indemnification. This prevents the consultant from claiming protection for actions beyond their agreed scope of work.
In another example, a logistics provider agrees to transport goods for a retailer. The contract includes an indemnity clause covering losses related to transportation. If the logistics provider also offers warehousing services but those services are not covered under the indemnity, the contract should make this clear. Otherwise, disputes could arise if losses occur during storage rather than transport.
An example of a services by indemnitee clause
Here’s how a services by indemnitee clause might look in a contract:
"Indemnification under this Agreement shall apply solely to services performed by the Indemnitee as specified in this Agreement. Any services provided outside the agreed scope shall not be covered by the indemnity obligations set forth herein."
Conclusion
Services by indemnitee clauses help clarify the scope of indemnification, ensuring that protection applies only to agreed-upon work. This prevents misunderstandings, protects businesses from unexpected liability, and ensures fairness in contractual risk allocation. A well-defined clause helps businesses avoid disputes and manage risk effectively.
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.