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Indemnity Agreement

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Indemnity Agreement regarding Sale of Industrial Specialty Equipment

Agreement made on the between

, a corporation organized and existing under the laws of the state of , with its principal office located at

(street address, city, state, zip code), referred to herein as Indemnitor, and

, a corporation organized and existing under the laws of the state of , with its principal office located at

(street address, city, state, zip code), referred to herein as Indemnitee.

Whereas, Indemnitee has sold and sells Industrial Specialty Equipment (the Equipment) to Indemnitor described further as:

Whereas, Indemnitor's operation might contain some hazard to Indemnitor, its employees, agent, or third parties and this has been revealed to and discussed with Indemnitor; and

Whereas, both Indemnitor and Indemnitee intend that Indemnitee, its officers, agents, and employees shall not be liable or in any way responsible for damage, loss or expense resulting to Indemnitor, its employees, agents, representatives, or third parties due to accidents, mishaps, or injuries, either to person or property, or of any nature to person or property, of any kind arising from any cause whatever arising from the installation or use of the Equipment, except such damage, loss, or expense arising from intentional misconduct of Indemnitee or its employees acting within the scope of their employment.

Now, therefore, for and in consideration of the mutual covenants contained in this agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

1. Indemnification

Indemnitor assumes the risk of all damage, loss, costs, and expense, and agrees to indemnify and hold harmless Indemnitee, its officers, agents, and employees from and against any and all liability, damage, loss, cost, and expense that may accrue to or be sustained by Indemnitee, its officers, agents, or employees on account of any claim, suit, or action made or brought against Indemnitee, its officers, agents, or employees, for the death of or injury to persons or destruction of property involving Indemnitor, its employees, agents, representatives and/or third parties, sustained in connection with the installation and/or use of the Equipment, arising from any cause whatever, except negligence and willful misconduct of Indemnitee or its employees acting within the scope of their employment.

2. Compliance with Laws

Indemnitor agrees it will comply with and will cause its employees, agents, and representatives to comply with all the Indemnitee's safety rules and all rules, regulations, and standards of and issued pursuant to the applicable state and federal Occupational Safety and Health Act (OSHA) while installing or using the Equipment.

3. Waiver and Release

Indemnitor waives all rights to make claim or file suit against Indemnitee for, and relieves Indemnitee from all liability or responsibility of any kind arising from, such damage, loss, cost, or expense; and the consideration received by Indemnitor pursuant to the purchase of said Equipment is complete satisfaction for all such damage, loss, or other expense previously or subsequently sustained.

4. Severability

The invalidity of any portion of this Agreement will not and shall not be deemed to affect the validity of any other provision. If any provision of this Agreement is held to be invalid, the parties agree that the remaining provisions shall be deemed to be in full force and effect as if they had been executed by both parties subsequent to the expungement of the invalid provision.

5. No Waiver

The failure of either party to this Agreement to insist upon the performance of any of the terms and conditions of this Agreement, or the waiver of any breach of any of the terms and conditions of this Agreement, shall not be construed as subsequently waiving any such terms and conditions, but the same shall continue and remain in full force and effect as if no such forbearance or waiver had occurred.

6. Governing Law

This Agreement shall be governed by, construed, and enforced in accordance with the laws of the State of .

7. Notices

Any notice provided for or concerning this Agreement shall be in writing and shall be deemed sufficiently given when sent by certified or registered mail if sent to the respective address of each party as set forth at the beginning of this Agreement.

8. Attorney’s Fees

In the event that any lawsuit is filed in relation to this Agreement, the unsuccessful party in the action shall pay to the successful party, in addition to all the sums that either party may be called on to pay, a reasonable sum for the successful party's attorney fees.

9. Mandatory Arbitration

Any dispute under this Agreement shall be required to be resolved by binding arbitration of the parties hereto. If the parties cannot agree on an arbitrator, each party shall select one arbitrator and both arbitrators shall then select a third. The third arbitrator so selected shall arbitrate said dispute. The arbitration shall be governed by the rules of the American Arbitration Association then in force and effect.

10. Entire Agreement

This Agreement shall constitute the entire agreement between the parties and any prior understanding or representation of any kind preceding the date of this Agreement shall not be binding upon either party except to the extent incorporated in this Agreement.

11. Modification of Agreement

Any modification of this Agreement or additional obligation assumed by either party in connection with this Agreement shall be binding only if placed in writing and signed by each party or an authorized representative of each party.

12. Assignment of Rights

The rights of each party under this Agreement are personal to that party and may not be assigned or transferred to any other person, firm, corporation, or other entity without the prior, express, and written consent of the other party.

13. Counterparts

This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which together shall constitute but one and the same instrument.

14. In this Agreement, any reference to a party includes that party's heirs, executors, administrators, successors and assigns, singular includes plural and masculine includes feminine.

WITNESS our signatures as of the day and date first above stated.

(Name of Indemnitor)

By:

(Printed Name & Office in Corporation)

(Signature of Officer)

(Name of Indemnitee)

By:

(Printed Name & Office in Corporation)

(Signature of Officer)

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What an Indemnity Agreement Covers

An Indemnity Agreement is a contract in which one party (the indemnitor) agrees to compensate or defend another party (the indemnitee) against specified losses, claims, liabilities, or expenses. These agreements allocate financial responsibility for third-party claims, breaches, or specified risks arising from a transaction, project, or ongoing relationship. Typical clauses define the scope of covered claims, caps on liability, duty to defend, notice and tender procedures, and governing law. Parties use indemnity language in commercial contracts, leases, service agreements, and construction or professional engagements to manage and transfer risk.

Why an Indemnity Agreement Matters

An indemnity clause clarifies who pays for losses and who controls defense decisions when claims arise, reducing uncertainty and litigation costs. Well-drafted indemnities protect businesses and service providers by assigning predictable financial exposure and allocating legal-defense responsibilities.

Why an Indemnity Agreement Matters

Who Typically Prepares or Signs an Indemnity Agreement

Indemnity Agreements are used across legal, operational, and commercial teams; the drafter often depends on the transaction type and exposure level.

  • Corporate legal teams and outside counsel who draft and negotiate indemnity scope and defenses.
  • Procurement or contract managers who include indemnities in vendor and service agreements.
  • Authorized officers or partners who have authority to bind the company to financial obligations.

Choose signatories with authority to bind the entity and consult counsel when financial caps or defense obligations are significant.

Who Signs and Why

Authorized Officer

An executive or officer with corporate signing authority signs for the indemnitor. Their signature binds the company to financial obligations and defense duties; confirm board or delegated authority where required.

Contracting Representative

A procurement or operations leader often signs on behalf of the indemnitee to accept terms and confirm business needs; ensure their role aligns with internal approval thresholds and corporate policy.

Core Elements to Include in a Professional Indemnity Agreement

A clear structure reduces disputes. Include specific definitions, scope limits, procedural steps for claim notice, and remedies available to both parties to avoid ambiguity and litigation.

Definitions

Define "Claim," "Losses," "Indemnitee," and "Indemnitor" precisely so coverage boundaries are clear and disputes over scope are minimized.

Scope of Coverage

Specify which acts, omissions, third-party claims, or periods are covered; state whether consequential, punitive, or indirect damages are included or excluded.

Duty to Defend

Clarify whether the indemnitor must defend the indemnitee immediately, control defense counsel selection, or reimburse defense costs after the fact.

Financial Limits

Include liability caps, deductibles, or aggregate limits to define maximum exposure and align insurance coverage with contractual obligations.

Notice and Tender

Set timing and method for delivering claim notices and tendering defense; require prompt written notice and cooperation from the indemnitee.

Governing Law

Select the state law that governs disputes and state whether arbitration or court litigation is the required dispute resolution forum.

Step-by-Step: Completing an Indemnity Agreement

Follow these steps to assemble, review, and execute an enforceable indemnity agreement with clear responsibilities and timelines.

  • 01
    Draft Core Terms: Define scope, caps, duty to defend, and exclusions.
  • 02
    Align Insurance: Confirm required policies and limits with insurer or broker.
  • 03
    Legal Review: Have counsel review for statutory limits and enforceability.
  • 04
    Execute and Distribute: Collect signatures, date the document, and circulate executed copies.

Where to Send and File an Executed Indemnity Agreement

After execution, route the signed agreement to internal stakeholders and store it where it can be retrieved for claims, audits, and renewals.

  • Legal Department: Primary repository for negotiation records and counsel reviews.
  • Risk/Insurance: Provide copies to risk management and insurer for coverage alignment.
  • Contract Repository: Upload final PDF to corporate contract management or ECM system.
  • Key Business Units: Share with operations or project owners who manage performance and claims.

Configuring an Online Signing Workflow for Indemnity Agreements

Set fields and authentication to preserve record integrity and meet legal requirements for intent and attribution.

Field Configuration
Signature Block Required signature + printed name + title + date
Authentication Email with optional SMS code or advanced signer authentication
Conditional Fields Show insurer or cap fields only if checkbox selected
Audit Trail Enable IP, timestamp, and event log capture

Digital Signing and File Format Considerations

Use formats and authentication that support intent, attribution, and long-term access when signing indemnity agreements electronically.

  • Formats: PDF/A or signed PDF
  • Integrations: Connect to NetSuite or Google Workspace
  • Authentication: Email, SMS, or advanced methods

Potential Legal and Financial Risks

Contract Liability: Payment obligations and legal fees
Insurance Gaps: Coverage mismatch with indemnity scope
Uncapped Exposure: Unlimited liability risk
Statute Limits: Claims barred by statutes of limitations
Third‑Party Claims: Large defense and settlement costs
Regulatory Penalties: Fines for noncompliance (industry-specific)

Common Drafting and Execution Mistakes

  • Using overly broad or undefined terms that unintentionally expand liability beyond negotiated limits.
  • Failing to align indemnity obligations with available insurance coverage and policy endorsements.
  • Omitting clear notice and tender procedures, which can lead to disputes over defense obligations.
  • Allowing non‑authorized individuals to sign, creating challenges to enforceability and authority.

Practical Tips for Accurate and Efficient Completion

Adopt consistent templates, require internal approvals, and confirm insurance evidence before accepting indemnity exposure.

Use a Standard Template
Maintain a reviewed standard indemnity template that includes defined terms, caps, exclusions, and notice procedures to reduce negotiation time and legal review cycles.
Align Insurance Requirements
Specify required policy types and minimum limits, request certificates of insurance, and require additional insured endorsements when appropriate to ensure indemnity obligations are supported.
Limit Scope and Amounts
Negotiate specific carve-outs for consequential or punitive damages and set per-claim or aggregate caps consistent with commercial risk tolerances and insurer limits.
Document Authority
Require signers to state title and authority; maintain internal delegation records to avoid disputes about signing authority.

Real-World Examples: How Indemnity Clauses Are Used

These short examples show typical clauses and business contexts where indemnities allocate risk and outline procedures.

Vendor Services Agreement

A software vendor agrees to indemnify a client for third‑party IP claims arising from delivered code

  • Vendor controls defense counsel selection
  • The clause requires vendor insurance and immediate notice of claims; client must cooperate with reasonable defense efforts.

Construction Subcontract

A subcontractor indemnifies the general contractor for site injuries caused by subcontractor negligence

  • Indemnitor must defend and indemnify promptly
  • The subcontract ties indemnity to minimum insurance limits and requires additional insured endorsements.

Timeframes and Deadlines to Watch

Contracts typically set procedural deadlines for notice, tender, and defense steps; meet these to preserve indemnity rights and obligations.

Notice of Claim:

Require written notice promptly — commonly within 30 days of learning of a claim.

Tender of Defense:

Tender should occur immediately upon receipt of a third‑party claim to trigger duty to defend.

Insurance Proof:

Request certificates of insurance before performance begins and updated at renewal.

Response Deadlines:

Set internal review deadlines (e.g., 14–30 days) to assess coverage and begin defense planning.

Statute of Limitations:

Filing deadlines for claims vary by state; confirm the applicable statute to avoid barred actions.

eSignature Vendor Comparison for Executing Indemnity Agreements

Compare common vendor features and starting prices; signNow appears first in the table. Feature availability and plan limits vary by vendor and plan.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial Varies by vendor Varies by vendor Varies by vendor Varies by vendor
Bulk Send Yes Yes Yes Yes Varies by plan
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Varies by plan Varies by plan Varies by plan Varies by plan
Envelope Cap No cap 100 envelopes/user/year Varies by plan Varies by plan Varies by plan

Essential Data and Compliance Items to Record

Parties: Full legal names
Effective Date: MM/DD/YYYY format
Scope: Covered claims defined
Limits: Caps and thresholds
Insurance: Required policy details
Governing Law: State selected

Frequently Asked Questions About Indemnity Agreements

Answers to common questions address enforceability, electronic signing, notice procedures, and interaction with insurance.


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