Indemnification is an important legal concept and one that is relied on by many individuals and businesses throughout the U.S. Understanding the various issues related to indemnification meaning is essential if you're to protect yourself from potential liability. This article takes a look at some of the most frequently asked questions about indemnification and provides answers for those based in Dallas looking for local counsel familiar with the relevant regulations.

What Is Indemnification?

Indemnification is a legal concept used to shift the burden of damages or loss from one party to another. An indemnified party is typically protected from a variety of liabilities, including certain breach of contract liabilities, tort liabilities, economic losses and more. It is most commonly found in contracts, which may contain separate indemnification provisions, and many businesses rely on these clauses to protect themselves from liability. In short, an indemnified party does not accept responsibility for any loss incurred due to the actions or omissions of the indemnifying party.

Does Indemnification Appear in Every Contract?

No, but it is very common to see in contracts. The most common types of contracts to have indemnification provisions are service agreements, agreements between business partners, intellectual property agreements, loan agreements, software licensing agreements and real estate agreements. While some of these agreements may not require indemnification, it is often beneficial to include such provisions for both parties involved.

Do Indemnification Clauses Provide Absolute Protection?

No, indemnification clauses are not infallible. They typically contain provisions stating that damages must be "direct" or "quantifiable," meaning that the damage must be related to the other party's actions or omissions. In some cases, an indemnified party may be liable for indirect, or unquantifiable, losses such as lost profits. Additionally, if the indemnification clause is too broad, it may be struck down by a court.

Who Is Responsible for Incurring Legal Costs?

It depends on the language of the indemnification clause. Generally, the party being indemnified is not responsible for its own legal expenses as long as the damages covered by the indemnification clause are quantifiable. However, if defense costs are not explicitly mentioned in the agreement, the responsibility for such expenses may be determined on a case-by-case basis.

Who Is Responsible for Settling Disputes?

Again, the language of the agreement is key when it comes to settling disputes. Disputes over the scope of liabilities covered by the indemnification clause can be settled in court, but if the indemnification clause also contains a provision for mediation or arbitration, then these methods must be used in order to resolve the dispute.

Where Can Dallas-Based Businesses Find Legal Counsel Familiar with Local Regulations?

UpCounsel provides Dallas-based businesses with access to experienced attorneys who are familiar with local regulations. Their network of highly experienced lawyers can be hired on for a one-time consultation or a full-time freelance legal department. Businesses of all sizes, from small businesses to the Fortune 1000, trust UpCounsel and its attorneys for high-quality and cost-effective legal services. In addition, the profiles of their online attorneys feature ratings and reviews of their recent legal work.


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