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Indemnification Clauses: Definition & Examples

Instructor: Jessica Schubert

Jessica is a practicing attorney and has taught law and has a J.D. and LL.M.

This lesson will explain what constitutes an indemnification clause, which is a type of liability clause you've probably encountered in your travels and other common activities. In addition, you will review examples of some possible indemnification clauses.

What is an Indemnification Clause?

Imagine that you take your six-year-old cousin to a bounce house for an afternoon of fun and games. When you arrive, you see that the building is full of inflated bounce houses, trampolines, and other objects that children can jump on. You pay and you are asked to sign a form which states that you understand and agree that if your cousin gets hurt, you will not sue the bounce house owner. This form that you must sign for your cousin to participate in the activities is an example of an indemnification clause.

An indemnification clause is an agreement where you accept responsibility in a certain situation for any injuries or harm that may happen to you. Frequently, indemnification clauses are referred to as hold harmless clauses, since you are agreeing to hold the other party harmless from being responsible for damages.

Indemnification clauses can be brief or expansive, depending on the clause. The clause can include restrictions on a person's ability to file a lawsuit, the time frame for filing a suit, the maximum amount of liability involved, and other limitations for lawsuits. In many instances, even though there is an indemnification clause, there may still be a way for the injured party to obtain damages for harm that occurred to them if it was substantial or deemed valid.

Examples

One way to understand indemnification clauses better is to review an example. A frequent indemnification clause relates to the purchase of cruise vacation tickets. You may have even agreed to one of these clauses without realizing it! Check your next cruise ticket. Typically, the reverse side of the actual ticket contains language that includes an indemnification clause. The ticket frequently states that the cruise company is not responsible for lost luggage, acts of God, illness contracted on board the ship and even more. The ticket may also indicate that any claim is subject to mediation or a non-court solution to any legal matters. So when you buy the ticket, you are agreeing not to sue the company for any injuries or problems you might encounter in accordance with the terms on the cruise company's indemnification clause.

Another example of an indemnification clause arises when someone hires a contractor to perform work at his or her home. The contractor's work contract will usually include an indemnification clause. This clause frequently includes language that indicates that the property owner will pay all costs, legal fees, medical expenses, and more related to third party lawsuits against the contractor which arise from the work performed. A third party lawsuit occurs when someone other than the contractor and the person hiring the contractor files a lawsuit relating to the property.

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