Do you know what you’re indemnifying?
Why do you need to be careful about what you're indemnifying in your contract?
Do you know what you’re indemnifying?
So why do you need to be careful about what you’re indemnifying in your contract? If you say you are going to indemnify somebody in a contract, what that means is if they have to pay out any money, if they have a liability and they’ve paid out to cover that, if you are indemnifying them for that, you have to pay them. So it might be that they’ve said, you have to indemnify us for all of these consequential third-party damages. And if you say, yeah, all right, I’ll do that. If somebody pulls a plug out of a wall, all the computers go off, client loses millions, but then they fall out of a window and get hit by a car and die, you are liable for that death because it’s a consequence of them pulling out that plug and falling out of that window. You only want to be liable for your direct damages.
We go on about damages a lot, but when you’re indemnifying, you also need to be clear what you are indemnifying people for. They are different from the liabilities, but they do link because you are covering them for their obligations and the money they have to pay out.