Indemnification is a type of contract agreement in which one party agrees to be financially responsible for any potential financial losses incurred by the other party due to their actions. It provides a measure of greater security to the indemnified party, allowing them to pursue their business goals with the confidence that, should anything unfortunate or unexpected occur, they will not be held liable. This article will explain indemnification agreements, how they work, and explore the particular details and considerations that must be made when entering into an indemnification agreement in New York.

An indemnification agreement is a contract in which both parties agree to bear certain costs or damages in the event that one of the parties is taken to court, or if they incur losses due to their own negligence. The primary party who is required to indemnify is commonly referred to as the “indemnitor” and is responsible for the losses of the secondary party, referred to as the “indemnitee”. The indemnitor is usually responsible for paying the indemnitee’s legal fees and any applicable judgments if the indemnitee is sued as a result of the indemnition agreement.

Indemnification agreements are typically used in a variety of legal contexts where both parties act in good faith but may still be liable for damages or injuries. New York State Law recognizes that all work performed in good faith and within the scope of an agreement is not necessarily liable for such damages, and indemnification agreements provide the means for parties to contractually provide that an indemnitee will not be held liable for any losses or damages incurred by an indemnitor.

Indemnity agreements are also used in many business relationships, most commonly when a vendor or contractor provides a service for a business. The indemnity agreement within a business context often requires that the indemnitor pay the indemnitee’s legal diligence costs, settle any claims brought against the indemnitee arising from the indemnitor's negligence or wrongful acts, and provide legal liability insurance for any potential claims.

The language used in an indemnification agreement is critical to ensure that both parties are adequately protected from any loss or damages. In New York, in order for the indemnification agreement to be enforceable, it must be clear that the indemnitor is responsible for the losses of the indemnitee and will also provide coverage for attorney’s fees and any lawsuit costs, should these become necessary or applicable.

Indemnification agreements must also include a clear “Hold Harmless” clause, in which the parties agree to not hold the other party responsible for any costs and damages that arise from their own negligence or wrongful acts. This clause is particularly important in business arrangements, and is explicitly required by New York law.

When looking for counsel that understand local regulations, it is important to ensure that the attorney you choose has experience with indemnification agreements in New York. The primary consideration should be whether or not they possess the necessary skills and experience to properly craft and execute an indemnification agreement that will protect both parties.

Additionally, the attorney should have a thorough understanding of the state's laws regarding indemnification, as well as any relevant case law that may affect the agreement. If done properly, an indemnity agreement can provide considerable protection and security for both parties involved and can help to minimize the risk of potential losses and damages.

Topics:

Indemnification,

Business Lawyers,

New York