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What is an Indemnity Agreement?
An Indemnity Agreement (also known as a Hold-Harmless Agreement) protects someone from liabilities, losses, claims, or damages when conducting a service, transaction, or activity with another party.
In simple terms, indemnity refers to one party compensating another for their losses.
This has great implications for the outcome of any legal actions that may arise while the parties do business together.
To ensure fair treatment, it’s crucial the parties use a contract to outline the extent and limitations of the indemnification (i.e., the terms and conditions that apply).
An Indemnity Agreement is also known as:
- Hold-Harmless Agreement
- No-Fault Agreement
- Assignment of Indemnity
For a simpler agreement, you can also use a Release of Liability or an Activity Waiver. These documents can also protect against liabilities, losses, claims, or damages but might work better for short-term business relationships.
Who are the parties in an Indemnity Agreement?
Indemnitee: The party protected by the agreement.
Indemnifier: The party that provides protection in the agreement.
The parties may be individuals, corporations, or organizations. If there is more than one indemnitee (and they work independently of each other) you may need multiple contracts.
What is the purpose of an Indemnity Agreement?
An Indemnity Agreement clarifies who should pay compensation should a situation result in one party’s losses. Generally, one party accepts:
- The risk of doing business
- The responsibility for paying any damages that are incurred (or might incur)
Certain contracts hold greater risks than others. With an Indemnity Agreement, contracted parties can minimize disputes by outlining when and how one party should compensate the other.
If there’s a likelihood for injuries, property damage, or other accidents to occur, the situation would likely benefit from an Indemnity Agreement. For example, parties might seek indemnity in the following scenarios:
It’s important to note that this agreement does not excuse a party from negligence, fraud, or other unlawful behavior. However, it does outline a course for legal remedies should an incident occur despite the parties’ best efforts.
How to draft an Indemnity Agreement
Customize LawDepot’s Indemnity Agreement template to suit your needs. Simply answer our questionnaire to generate your document, then download it as a PDF or print a copy.
1. Establish general details about the contract
Clarify who’s creating the document (the indemnifier or the indemnitee) and which state’s laws to apply to the template. Then, specify any additional terms you’d like to address, such as:
- Protecting sensitive information with a confidentiality clause
- Protecting against the costs of a criminal proceeding
- Limiting the amount of monetary compensation
- Requiring liability insurance
2. Describe the situation that requires indemnity
State why you’re using the Indemnity Agreement (e.g. for a service, activity, or transaction).
Our template provides sample texts for you to reference when describing your situation. For example, the following scenarios might require an Indemnity Agreement:
- A commercial landlord seeking protection from a tenant’s renovations
- A contractor performing a service on a private property
- A subcontractor working for a contractor
- A special event on a private property
- An owner selling their business
3. Provide party details
Provide the full name and contact information of the parties in the agreement (whether individuals, corporations, or organizations).
4. Add unique clauses (optional)
If needed, you can add extra terms or information that isn’t already included in the template. The questionnaire provides tips for drafting your own clause.
For peace of mind, you can also get a lawyer to review your contract to ensure your words are clear and match your intent.
5. Sign the document
Review your Indemnity Agreement; you can use LawDepot’s document editor to modify any text that does or doesn’t apply to your situation.
Once you’re satisfied with the terms of the agreement, have all parties sign it to acknowledge their consent.
Should I notarize the Indemnity Agreement?
Most jurisdictions do not require notarization for an Indemnity Agreement to be valid. However, you can reinforce the validity of the parties’ signatures if you choose to notarize the document.
LawDepot’s Indemnity Agreement template allows you to include witness signatures. Witnesses can attest to a signatory’s identity and intent to enter the contract.
Is an Indemnity Agreement legally binding?
Like any contract, an Indemnity Agreement must meet certain legal requirements to be enforceable. When executed correctly, an Indemnity Agreement is generally a legally binding contract.
If one party violates the terms of the agreement, it’s possible to use the document as evidence in court. If the terms are valid, a judge can enforce those terms in court. However, a judge may deem the contract invalid if they find the indemnitee to be guilty of negligence, fraud, or other criminal behavior.
