The Dreaded Indemnification Clause

Whether you are negotiating an event agreement, an agreement to procure goods or services, a franchise agreement or any number of other types of contracts, it’s hard to imagine a more common sticking point that can hold up a deal than that dreaded section titled “Indemnification.”

Going into a negotiation, each party may expect the other to indemnify it and hold it harmless (and even “save” it harmless) from (and, of course “against”) any (and, of course, “all”)–get ready for the list–claims, causes of action, demands, suits, interests, liens, liabilities, attorneys’ fees, complaints, counterclaims, cross-claims, grievances, illnesses, bad moods, bad hair days, favorite teams choking during the last five minutes before the buzzer, and all manner of bad luck or fortune, arising from (or, of course, “related in any way to”) … drumroll please … well, anything under the sun if the demanding party thinks it can get away with it.

You don’t have to be a lawyer to know how dangerous a bad indemnification clause can be to a party against which it is directed. These clauses in contract forms jump out at procurement officers, event planners and others, who know to quickly lawyer up to respond to them. Where the negotiation goes from there depends largely on the risk tolerance of the respective parties and the disposition of their lawyers. Rightly or wrongly, the subject of indemnification always slows negotiations down, and sometimes kills deals altogether.