One of the standard "boilerplate" clauses in contracts is known as the "indemnification/hold harmless" clause. Basically this seeks to protect the party that doesn't screw something up from expenses, legal fees and damages caused by the party that did screw something up. BUT, BUT, BUT you have to be careful when reviewing this clause. Even though the jerk on the other side will say something like "it's just the standard boilerplate clause" DON'T YOU BELIEVE IT. Many times the drafter of the contract will try to pull something like the other guy "will indemnify and hold xyz harmless from any and all claims, lawsuits, proceedings, assessments, etc. and the resulting expenses, damages, judgments, costs, fines, surcharges and legal fees, arising directly or indirectly out of this agreement..." or some such bullshit.
NO, NO, NO! Indemnification should be based upon ADJUDICATED negligence/breach/intentional screwup. Not just anything arising directly or indirectly out of this agreement type stuff. What happens if some jerk sues you and the other guy for a frivolous action. Do you have to indemnify and hold the other guy harmless when it is eventually judged that you did nothing wrong? Trust me you won't get a warm and fuzzy feeling from doing so.
So the moral of today's story is have your freakin' lawyer C A R E F U L L Y review any indemnification and hold harmless clause, and make sure that you are only stuck with paying when you were the one that has been ADJUDICATED to have screwed up.
No comments:
Post a Comment