Indemnity is a contractual agreement between two parties to protect each other against losses, liabilities, or injury. Under an indemnity, one party agrees to reimburse the other for any loss, damage, or injury suffered. Because indemnity contracts can involve complex legal issues, it’s important to work with an experienced corporate attorney who understands local regulations.

If you’re based in Dallas and need counsel, UpCounsel can help. Our network of experienced business lawyers is dedicated to providing quality legal services at competitive rates. From one-time consults to entire freelance legal departments, UpCounsel has the resources and expertise to help you protect your business and investments.

To help you understand what indemnity covers, this FAQ provides an overview of the basics and an explanation of the types of risks an indemnity might protect against.

What Is the Definition of Indemnity?

In a legal context, indemnity is a contractual agreement which one party agrees to hold the other harmless as a result of certain losses, liabilities, or injury. It is a form of protection from damage or harm, as well as a way to transfer the risk of loss or liability from one party to the other.

Generally, an indemnity covers any financial losses incurred as a result of a breach of contract, negligence, or any other action in which one party is held accountable for damages. It is usually included in contracts to protect the weaker party from financial losses or to protect both parties from future legal action for incidents outside their control.

What Types of Risks Does Indemnity Cover?

Indemnity can cover a broad range of risks, including personal or property damage, financial losses, environmental liabilities, and breach of contract. Each indemnity agreement is unique and generally tailored to the specific needs and situation of the parties involved.

Are There Legal Limitations for an Indemnity Agreement?

Yes. Depending on the state, there may be laws limiting the scope of potential liability and the amount of indemnity an individual or business can receive. In some cases, even an indemnity agreement can be found to be invalid or unenforceable if the terms are too vague or exceed the limits of applicable law.

A knowledgeable corporate lawyer will be familiar with the restrictions imposed by local regulations and best practices and will be able to explain any limitations to an indemnity agreement.

Do I Need an Attorney to Create an Indemnity Agreement?

Yes. An experienced corporate attorney is essential in ensuring that all the terms of an indemnity agreement comply with local laws and regulations. An indemnity contract involves complex financial and legal issues, and an attorney will be able to guide you through the process, provide legal advice, and explain your rights and obligations under the agreement.

If you’re based in Dallas and need legal counsel regarding an indemnity agreement, UpCounsel can help. Our network of experienced business lawyers can provide cost-effective legal services tailored to your needs.

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