Frequently Asked Questions on Indemnify Definition
Indemnify definitions can be confusing to understand, even with the help of experienced legal counsel2 min read
Indemnify definitions can be confusing to understand, even with the help of experienced legal counsel. This article provides answers to frequently asked questions regarding indemnification relating to the Chicago area. Keep reading to learn more about what actual indemnification means, what the difference is between holding harmless and indemnifying, and who has the obligation to indemnify contracts and transactions.
What is an Indemnify Definition?
At its heart, an indemnify definition means to make a person or company whole for any losses incurred as a result of a particular action. It often requires one party to a contract (the indemnifying party) to cover any losses or damages suffered by another party (the indemnified party).
There are many different types of indemnification clauses, depending on the specific details of the contract. The intent is always the same: to protect the parties involved by transferring the risk of loss or expense from one party to another.
What is the Difference Between Holding Harmless and Indemnifying?
Holding harmless and indemnifying are sometimes used interchangeably, but they are not actually the same thing. When an indemnification clause is included in a contract, it both holds the indemnified party harmless and shifts the ultimate responsibility of the loss or damage onto the indemnifying party.
The phrase “hold harmless” is generally used to refer to a clause in a contract that waives the indemnified party’s right to any kind of damages, should damages occur. In other words, it stops the indemnified party from suing the indemnifying party for losses or damages, as long as the parties comply with the terms of the contract.
Who Has the Obligation to Indemnify Contracts and Transactions?
It depends on the terms of the specific contract. Depending on what is written and agreed to between the parties, the indemnifying party may have an obligation to cover any losses or expenses related to the indemnified party’s actions.
For example, a common clause in many contracts is a representation and warranty clause where one party agrees to indemnify the other for any losses or damages if the former makes a false statement in writing. In this case, the indemnifying party would have the obligation to cover the costs.
On the other hand, the indemnified party may also have a duty to indemnify the indemnifying party. This is especially true when the indemnified and indemnifying parties are not the same. In this case, the indemnified party is responsible for the reimbursement of the indemnifying party for any losses or damages sustained as a result of its actions.
Indemnify definitions can be complicated and difficult to understand, but they are essential for anyone engaging in commercial transactions. Understanding the difference between holding harmless and indemnifying, as well as who has the obligation to indemnify contracts and transactions, are two of the most important aspects of understanding indemnity contracts. Consulting experienced legal counsel in the Chicago area can provide further helpful clarification on any indemnify definition questions.