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Indemnity Agreement


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INDEMNITY AGREEMENT

THIS INDEMNITY AGREEMENT (the "Agreement") made as of this ________ day of ________________, ________ (the "Execution Date"),

BETWEEN:


____________________ of _________________________
(the "Indemnitee")

OF THE FIRST PART

and


____________________ of _________________________
(the "Indemnifier")

OF THE SECOND PART

BACKGROUND:

  1. The Indemnitee desires protection against any personal liability, claim, suit, action, loss, or damage that may result from the Indemnitee's participation in the Service.
  2. The Indemnifier wishes to minimise any hardship the Indemnitee might suffer as the result of any personal liability, claim, suit, action, loss, or damage that may result from the Indemnitee's participation in the Service.

IN CONSIDERATION and as a condition of the Indemnifier and the Indemnitee entering into this Agreement and other valuable consideration, the receipt and sufficiency of which consideration is acknowledged, the Indemnifier and the Indemnitee agree as follows:

  1. Definitions
  2. The following definitions apply in the Agreement:
    1. "Service" means the following:
      ___________________________________________________________
      ___________________________________________________________
      ___________________________________________________________
      ___________________________________________________________
    2. "Expenses" means all costs incurred in the defence of any claim or action brought against the Indemnitee including lawyers' fees.
    3. "Notice of Claim" means a notice that has been provided by the Indemnitee to the Indemnifier describing a claim or action that has or is being brought against the Indemnitee by a Third Party.
    4. "Notice of Indemnity" means a notice that has been provided by the Indemnitee to the Indemnifier describing an amount owing under this Agreement by the Indemnifier to the Indemnitee.
    5. "Parties" means both the Indemnitee and the Indemnifier.
    6. "Party" means either the Indemnitee or the Indemnifier.
    7. "Third Party" means any person other than the Indemnifier and the Indemnitee.
  3. Indemnification
  4. The Indemnifier will hold harmless and indemnify the Indemnitee against any and all claims and actions arising out of the participation of the Indemnitee in the Service, including, without limitation, Expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with any liability, suit, action, loss, or damage arising or resulting from the Indemnitee's participation in the Service, subject to the limits on indemnification described in the section titled Exceptions to Indemnification. Where prohibited by law, the above indemnification does not include indemnification of the Indemnitee against a claim caused by the negligence or fault of the Indemnitee, its agent or employee, or any third party under the control or supervision of the Indemnitee, other than the Indemnifier or its agent, employee or subcontractor.
  5. In the case of a criminal proceeding, the Indemnitee will not be indemnified by the Indemnifier.
  6. Exceptions to Indemnification
  7. The Indemnitee will not be entitled to indemnification from the Indemnifier for any Expenses, judgments, fines, settlements and other amounts incurred as the result of the Indemnitee's participation in the Service where:
    1. in the case of a civil claim, the Indemnitee did not act in good faith and in a reasonable manner;
    2. the actions or conduct of the Indemnitee constituted wilful misconduct or was knowingly fraudulent or deliberately dishonest;
    3. the Indemnitee will or has received payment under a valid and collectible insurance policy or under a valid and enforceable indemnity clause, bylaw or agreement, except where payment under this insurance policy, clause, bylaw or agreement is not sufficient to fully indemnify the Indemnitee in which case the Indemnifier will be responsible for any shortfall in payment received; or
    4. an action or proceeding was initiated in whole or in part by the Indemnitee whether alone or along with one or more other claimants unless the action or proceeding has the written consent of the Indemnifier.
  8. Notice of Claim
  9. In the event of any claim or action, the Indemnitee will promptly provide the Indemnifier with written notice of the claim or action and will notify the Indemnifier within five business days of the commencement of any legal proceedings relating to the claim or action. The Indemnitee will provide the Indemnifier with all available information known to the Indemnitee relating to the claim or action.
  10. Authorisation of Indemnification
  11. In any case where the Indemnitee requires indemnification, the Indemnifier will make the determination of whether indemnification is appropriate having given consideration to the terms described in the Exceptions to Indemnification section. If the Indemnitee disagrees with the determination of the Indemnifier then the matter must be referred for review and determination to independent legal counsel reasonably satisfactory to the Indemnitee. In all cases the Indemnifier will bear all costs of any independent determination.
  12. The Indemnifier will bear the burden of proving that indemnification is not appropriate.
  13. The termination of any claim or action by judgment, order, settlement, conviction or upon an admission of guilt or its equivalent will not, of itself, create a presumption that the person did not act in good faith and in a reasonable manner.
  14. Assumption of Defence
  15. On being notified of any impending action or claim, the Indemnifier may, at its own Expense, participate in the defence of any action or claim and may, alone or with any other indemnifying party, assume the defence against the action or claim using counsel that are reasonably satisfactory to the Indemnitee.
  16. Once the Indemnifier has notified the Indemnitee of the intention to assume the defence, the Indemnifier will no longer be liable to the Indemnitee for any further Expenses subsequently incurred by the Indemnitee in relation to the defence of the claim. Once the Indemnifier provides notice to the Indemnitee that the defence of claim has been assumed by the Indemnifier, the Indemnitee may employ or continue to employ its own legal counsel however any fees or Expenses incurred by the Indemnitee subsequent to the notice of assumption of defence by the Indemnifier will be the sole responsibility of the Indemnitee.
  17. Failure to Defend
  18. If the Indemnifier elects not to assume the defence against the claim or action then the Indemnitee may defend against the claim or action in any manner the Indemnitee deems appropriate. The Indemnifier will promptly reimburse the Indemnitee for Expenses, judgments, fines, settlements and any other amounts actually and reasonably incurred in connection with the defence of the claim or action subject to the limits on indemnification described in the section titled Exceptions to Indemnification.
  19. Settlement and Consent of Indemnifier
  20. The Indemnitee will not settle any claim or action without first obtaining the written consent of the Indemnifier. The Indemnifier will not be liable for any amounts paid in settlement of any claim or action where written consent of the Indemnifier was not first obtained. The Indemnifier will not unreasonably withhold consent to any settlement.
  21. Settlement and Consent of Indemnitee
  22. The Indemnifier will not settle any claim or action without first obtaining the written consent of the Indemnitee. The Indemnitee will not unreasonably withhold consent to any settlement.
  23. Cooperation
  24. The Indemnifier agrees to cooperate in good faith and use best efforts to ensure that the Indemnitee is indemnified and reimbursed for any and all Expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with the defence of any claim or action resulting from the participation of the Indemnitee in the Service.
  25. The Indemnitee agrees to cooperate in good faith and provide any and all information within the Indemnitee's power as required for the defence of any claim or action and also to provide any and all information within the Indemnitee's power as required to help in a determination of indemnification as described under the Authorisation of Indemnification section.
  26. Expenses
  27. No costs, charges or Expenses for which indemnity will be sought under this Agreement may be incurred without the Indemnifier's written consent. Any required consent must not be unreasonably withheld.
  28. All reasonable Expenses incurred by the Indemnitee to enforce this Agreement, and all costs of defending any Third Party claims or actions brought against the Indemnitee under this Agreement will be the sole responsibility of the Indemnifier subject to the limits on indemnification described in the section titled Exceptions to Indemnification.
  29. Advances of Expenses
  30. At the written request of the Indemnitee, the Indemnifier will advance to the Indemnitee any Expenses, including lawyers' fees, incurred by the Indemnitee in defending any action brought against the Indemnitee. Where reasonable, and to minimise hardship to the Indemnitee, advance payments may be made prior to the disposition of any claim.
  31. The Indemnitee agrees to repay to the Indemnifier any advance payments of Expenses where a determination is ultimately made that the Indemnitee is not entitled to indemnification for reasons described under the Indemnification and the Exceptions to Indemnification sections.
  32. Payment
  33. All payments made by the Indemnifier to the Indemnitee will be made in full in immediately available funds within sixty days of receipt of Notice of Indemnity from the Indemnitee and without deduction for any counterclaim, defence, recoupment, or set-off.
  34. Any Notice of Indemnity sent by the Indemnitee to the Indemnifier must be made in writing and contain a full listing of the items to be covered in the payment. Any payment made by the Indemnifier to the Indemnitee will contain a listing of items covered under the payment.
  35. Enforcement
  36. If any right or remedy claimed by the Indemnitee under this Agreement is denied or is not paid by the Indemnifier, or on its behalf, within sixty days after a written Notice of Indemnity has been submitted by the Indemnitee to the Indemnifier, the Indemnitee may then bring suit against the Indemnifier to recover any unpaid amounts and if successful in whole or in part, the Indemnitee will be entitled to be paid any and all costs related to resolving the claim.
  37. Where a determination as described under Authorisation of Indemnification concludes that the Indemnitee's behaviour is not entitled to indemnification, this will not create a presumption that the Indemnitee is not entitled to indemnification under this Agreement.
  38. Insurance
  39. The Indemnifier must take out and maintain insurance coverage with an insurer reasonably acceptable to the Indemnitee on terms reasonable and sufficient to indemnify the participation of the Indemnitee in the Service.
  40. If the Indemnifier fails to maintain adequate liability insurance, the Indemnitee may take out insurance and charge all costs to the Indemnifier.
  41. Duration
  42. The rights and obligations of the Indemnitee and the Indemnifier under this Agreement will continue:
    1. so long as the Indemnitee is or will be subject to any possible claim or threatened, pending or completed action, suit or proceeding, whether civil, arbitrational, administrative or investigative that results from the participation of the Indemnitee in the Service; or
    2. until terminated by an agreement in writing signed by both the Indemnifier and the Indemnitee.
  43. Unlimited Indemnification
  44. Under this Agreement, indemnification will be unlimited as to amount.
  45. Full Release
  46. Only payment and satisfaction in full of all amounts and charges payable under this Agreement and the due performance and observance of all terms, covenants and conditions of this Agreement will release the Indemnifier and the Indemnitee of their obligations under this Agreement.
  47. Further Action
  48. No action or proceeding brought or instituted under this Agreement and no recovery from that action or proceeding will be a bar or defence to any further action or proceeding which may be brought under this Agreement by reason of any further failure in the performance and observance of the terms, covenants and conditions of this Agreement.
  49. Subrogation
  50. In the event that any indemnity payment is made under this Agreement, the Indemnifier will be subrogated to the extent of this payment to all of the rights of recovery of the Indemnitee. The Indemnitee will take all action required and provide all information necessary to secure these rights and to fully enable the Indemnifier to take any action to enforce these rights in the recovery of the indemnity payment.
  51. Amendments
  52. This Agreement may only be amended, terminated or cancelled by an instrument in writing, signed by both the Indemnifier and the Indemnitee.
  53. Assignment of Indemnifier Rights and Obligations
  54. The rights and obligations of the Indemnifier as existing under this Agreement may not be assigned, in whole or in part, without the prior written consent of the Indemnitee.
  55. Assignment of Indemnitee Rights and Obligations
  56. The rights and obligations of the Indemnitee as existing under this Agreement may not be assigned, either in whole or in part, without the prior written consent of the Indemnifier.
  57. Notices
  58. Any notices or deliveries required in the performance of this Agreement will be deemed completed when hand-delivered, delivered by agent, or seven days after being placed in the post, postage prepaid, to the Parties to this Agreement at the addresses contained in this Agreement or as the Parties may later designate in writing.
  59. Governing Law
  60. This Agreement will be governed by and construed in accordance with the laws of the Union Territory of the Andaman and Nicobar Islands.
  61. Jurisdiction
  62. The courts of the Union Territory of the Andaman and Nicobar Islands are to have jurisdiction to decide and settle any dispute or claim arising out of or in connection with this Agreement.
  63. General Provisions
  64. This Agreement contains all terms and conditions agreed to by the Indemnifier and the Indemnitee. Statements or representations which may have been made by either Party in the negotiation stages of this Agreement may in some way be inconsistent with this final written Agreement. All such statements are declared to be of no value to either Party. Only the written terms of this Agreement will bind the Parties.
  65. Any failure of either Party to enforce any of the terms, covenants and conditions in this Agreement does not infer or permit a further waiver of that or any other right or benefit under this Agreement. A waiver by one Party of any right or benefit provided in this Agreement does not infer or permit a further waiver of that right or benefit, nor does it infer or permit a waiver of any other right or benefit provided in this Agreement.
  66. This Agreement will pass to the benefit of and be binding upon the Parties' respective heirs, executors, administrators, successors, and permitted assigns.
  67. The clauses, paragraphs, and subparagraphs contained in this Agreement are intended to be read and construed independently of each other. If any part of this Agreement is held to be invalid, this invalidity will not affect the operation of any other part of this Agreement.
  68. All of the rights, remedies and benefits provided in this Agreement will be cumulative and will not be exclusive of any other such rights, remedies and benefits allowed by law or equity that the Parties may have now or may acquire in the future.
  69. Time is of the essence in this Agreement.
  70. This Agreement may be executed in any number of counterparts, each of which will be deemed to be an original and all of which together will be deemed to be one and the same instrument.
  71. Headings are inserted for the convenience of the Parties only and will not be considered when interpreting this Agreement. Words in the singular mean and include the plural and vice versa. Words in the masculine gender include the feminine gender and vice versa. Words in the neuter gender include the masculine gender and the feminine gender and vice versa.

IN WITNESS WHEREOF the Indemnitee and the Indemnifier have duly affixed their signatures under hand and seal on this ________ day of ________________, ________.


_________________________
____________________ (Indemnitee)

 


_________________________
____________________ (Indemnifier)

 

Last updated March 27, 2024

Written by 

Reviewed by 


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Fact checked by 



What is an Indemnity Agreement?

An Indemnity Agreement is a contract between two parties that protects one party from liabilities, losses, claims, and damages during their involvement in an activity.

In an Indemnity Agreement there are two parties: the indemnitee and the indemnifier. The indemnitee is the party protected by the agreement. The indemnifier is the party providing the protection.

For example, a skydiving company is likely to require a customer to sign an Indemnity Agreement to protect it from liability if there’s an accident during a jump. In this scenario, the skydiving company is the indemnitee, and the customer is the indemnifier.

An Indemnity Agreement is also known as the following:

  • Assignment of indemnity
  • Contract of indemnity
  • Hold harmless agreement
  • Indemnification agreement
  • No-fault agreement

What is indemnity?

Indemnity refers to protection from a loss or exemption from liability for damages or other financial claims. In an Indemnity Agreement, the indemnifier promises to save the indemnitee from loss caused to them by the indemnifier’s contract or by the conduct of any other person.

Should I sign an Indemnity Agreement?

Signing an Indemnity Agreement is an important decision that shouldn't be taken lightly by either party.

Indemnitee

As the indemnitee, it may be a good idea to sign an agreement if your company provides a service where there is a risk of injury or damages to a property.

An Indemnity Agreement can be helpful in your personal life as well. For example, if your friend gets into an accident while driving your vehicle, you may be liable for any damages. However, the liability shifts to your friend if they sign an Indemnity Agreement before borrowing the vehicle.

Indemnifier

As the indemnifier, it’s a good idea to be cautious when signing an agreement. Carefully read the document, or have a lawyer review it to understand the risks and responsibilities you’re agreeing to cover.

When do I use an Indemnity Agreement?

Many circumstances can benefit from an Indemnity Agreement. Some common uses include:

  • Providing services: Use an Indemnity Agreement to remove any liability when providing a service that may cause injury or damages.
  • Hosting events: Use an Indemnity Agreement when hosting or facilitating an event, such as a concert or charity fundraiser, in case of a potential loss or accident.
  • Purchasing real estate: Use an Indemnity Agreement to relieve any liability for future problems with the property, including problems caused by the seller.
  • Renting property: Use an Indemnity Agreement when you allow a tenant to move in before the lease date to hold the tenant to all the lease provisions, even though they’re moving in early.
  • Hiring workers: Use an Indemnity Agreement to absolve responsibility for any injuries or accidents caused by employees or contractors in the workplace.
  • Working as a consultant: Use an Indemnity Agreement to relieve yourself of any liability that might come from your work.

Can an employee ask for an Indemnity Agreement?

Employees aren’t automatically entitled to Indemnity Agreements. However, an employee might ask for indemnity to avoid liability for any losses or damages resulting from the good faith performance of their duties or obligations associated with their job.

Does an Indemnity Agreement need a witness?

No, it isn’t a legal requirement to have a witness sign an Indemnity Agreement. However, many banks and other institutions will have their own internal requirements for valid documents, and witness signatures may be one of them.

Does an Indemnity Agreement need a surety?

An Indemnity Agreement doesn’t require a surety. A surety is a person or company who takes responsibility for another party’s inability to uphold their end of a deal. If an indemnifier can't cover the losses or damages related to their agreement, the surety becomes liable.

If you wish to have a surety in your Indemnity Agreement, include it in the additional clauses section of the document.

How do I create an Indemnity Agreement in India?

You can create an Indemnity Agreement by completing LawDepot’s questionnaire. Using our template ensures you complete the following necessary steps:

1. State who the agreement is protecting

State if the Indemnity Agreement will protect your party or the other party.

2. State your location

States and territories in India may have differing indemnity laws. Select your state or territory, and we’ll tailor your Indemnity Agreement to meet the laws and regulations of your location.

You can use LawDepot’s Indemnity Agreement template in:

  • Andaman and Nicobar Islands
  • Andhra Pradesh
  • Arunachal Pradesh
  • Assam
  • Bihar
  • Chandigarh
  • Chhattisgarh
  • Dadra and Nagar Haveli
  • Dadra and Nagar Haveli and Daman and Diu
  • Daman and Diu
  • Goa
  • Gujarat
  • Haryana
  • Himachal Pradesh
  • Jammu and Kashmir
  • Jharkhand
  • Karnataka
  • Kerala
  • Ladakh
  • Lakshadweep
  • Madhya Pradesh
  • Maharashtra
  • Manipur
  • Meghalaya
  • Mizoram
  • Nagaland
  • National Capital Territory of Delhi
  • Odisha
  • Puducherry
  • Punjab
  • Rajasthan
  • Sikkim
  • Tamil Nadu
  • Telangana
  • Tripura
  • Uttar Pradesh
  • Uttarakhand
  • West Bengal

3. Outline the terms you wish to include

You may include any of the following terms in your Indemnity Agreement:

  • Indemnity insurance: The indemnifier should obtain liability insurance if they don’t have the resources to cover all the foreseeable liabilities under the agreement. You should weigh the cost of insurance against the protection it provides to determine if insurance coverage is reasonable for your contract.
  • Indemnification against criminal proceedings: Provide basic protection against civil lawsuits or criminal proceedings. Indemnification for a criminal proceeding is only available if the indemnitee has no reason to believe their conduct was unlawful.
  • Confidentiality clause: Ensure outside parties can’t access confidential or proprietary information within the agreement.
  • Monetary limit: Specify the maxiumum monetary amount of indenification (protection) for each claim or action. Otherwise, the amount of indemnification could be unlimited.

4. Describe the subject of the indemnity

Choose the category that best describes the subject of your Indemnity Agreement:

  • Service: Provides indemnity relating to the provision of services in a contract. For example, a construction company may seek indemnity for its workers from any damage they unintentionally cause to a property while providing a service.
  • Activity: Provides indemnity for a range of activities like hosting events, borrowing dangerous equipment, or providing thrill-seeking entertainment (e.g., bungee jumping). Choose this category if you’re unsure which one is best for you.
  • Transaction: Protects sellers and renters against liability for any issue concerning goods that are being sold or rented. This category also applies to landlords and tenants in a Lease Agreement.

5. Provide the indemnitee’s information

Include the indemnitee’s name, address, and whether they are an individual or company in the agreement.

The agreement can cover multiple indemnitees if they’re intimately related, such as spouses or business partners. However, if the indemnitees are working individually, they will each need an Indemnity Agreement.

6. Provide the indemnifier’s information

Include the indemnifier’s name, address, and whether they are an individual or company in the agreement.

If there are multiple indemnifiers, they will be jointly and individually liable for any claim or damages. This means each indemnifier is responsible for the entire claim or damages.

7. Outline any additional clauses

Include any additional terms or conditions that your Indemnity Agreement doesn't already cover (e.g., a surety).

8. Provide the signing details

State the agreement’s execution date. The execution date is the day the parties sign the agreement.

It isn't legally necessary to have witnesses sign the document, but it might be a good idea to do so if you need to submit your Indemnity Agreement to a bank or other institution.

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