Indemnification
A contractual obligation where one party agrees to compensate another for losses or damages.
Indemnification clauses shift financial responsibility for certain risks from one party to another. They are common in service agreements, leases, and business contracts. The indemnifying party agrees to cover losses, damages, legal fees, and other costs that may arise from specific circumstances outlined in the contract.
These clauses protect businesses from third-party claims and unforeseen liabilities. For example, a contractor might indemnify a client against any claims arising from the contractor's negligence during a project.
Example
A software vendor indemnifies its client against any intellectual property infringement claims related to the software.
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