When it comes to legal matters, nothing can be more important and vital than getting access to the right counsel. Having a reliable and experienced legal counsel is a key factor to help you reduce the risk related to certain business decisions, such as signing an indemnity agreement.

An indemnity agreement is a contract between two parties, in which one party (the ‘indemnitor’) agrees to be held responsible for any losses or damages suffered by the other party (the ‘indemnitee’). Being placed in such a vulnerable position, it is essential to have proper legal counsel to review the agreement before signing it.

To achieve this, it is necessary to consider the following five key aspects while examining the indemnity agreement in order to ensure a safe and secure decision. Let’s have a look.

1. Contents of the Agreement

The first thing to consider when signing an indemnity agreement is to go through the content of the agreement in detail. Make sure that it clearly outlines all the responsibilities, rights, and liabilities of both parties.

Check if the agreement covers all the specific losses or damages that it is intended to prevent. Further, make sure that the agreement is up to the local standards and regulations in the area where it is intended to be legally enforceable.

2. Insurance Coverage

Another key factor to consider in an indemnity agreement is the insurance coverage. The indemnitor should make sure that they have appropriate insurance coverage to handle the liabilities mentioned in the agreement.

The best way is to acquire a sufficient amount of professional liability insurance to cover any possible losses or damages. It is also advisable to consult with the insurer at the same time to make sure that any exceptions or limit of coverage are properly addressed.

3. Clear Event of Default

It is incredibly important to have a clear event of default mentioned in the indemnity agreement. This event should precisely define the conditions in which one party can be held responsible for any losses or damages.

Due to the broad nature of this type of agreement, it is also possible to include a provision that allows for one or both parties to terminate the agreement. Such a provision is particularly beneficial if the losses or damages exceed a certain amount or the indemnitor fails to fulfill their duties.

4. Statute of Limitations

The statute of limitations is a key factor to consider in an indemnity agreement. In New York, the limitation depends on the type of claim and it varies from one to six years.

Therefore, it is essential to include details of the statute of limitations in the agreement. This will ensure that both parties are aware of their rights before signing the agreement and also can help the indemnitor effectively manage their liabilities.

5. Consult With Counsel

Finally, it is paramount to consult with experienced attorneys before signing an indemnity agreement. It is especially important if the agreement contains intricate technical points and you need help making sense of them.

A great way to find reliable legal counsel is to use UpCounsel, a network of experienced attorneys based in New York specifically tailored to provide legal services to small businesses and Fortune 1000 companies.


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