Mutual Indemnification Clause Independent Contractor
Mutual indemnification clause independent contractor refers to a party involved in a contract and specifies indemnification costs and liabilities between them.3 min read
2. Mutual Indemnity Clauses
3. Advice for a Well-Written Independent Contractor Agreement
Updated November 2, 2020:
Mutual indemnification clause independent contractor refers to a party involved in a contract and specifies indemnification costs and liabilities between parties involved. Such clauses can be constructed so that only one party is indemnified by the other or mutual indemnification occurs.
Hold Harmless Clauses
A hold harmless clause is a statement in a contract, specifying that one or both parties agree not to hold the other responsible for any damages or injuries caused to the contract signee. It is widely used by doctors in contracts with hospitals, clinics, nursing homes, or other third parties. They are meant to protect the physician from any liability, making it impossible for the other party to claim damages and have a realistic chance of getting them.
The doctors' standard liability insurance does not cover indemnifications, and any doctor looking to have them covered would have to pay a significantly higher rate. Strangely, when there is no hold harmless clause between parties, most situations are covered by each party's insurance policies. However, when both parties have both liabilities insurance and active hold harmless clauses, the effect is an increased cost on both sides.
Generally speaking, all physicians should do their best to exclude any indemnification or hold harmless clauses from their contracts, as they generally tend to do more harm than good. However, if they must remain, the following measures should be taken:
- The language used should be as specific and as restrictive as possible. The clause should only apply to situations where the physician's negligence was at fault for the liability. Also, if the contract specifies that any intentional acts and omissions by the doctor are subject to liability, the language should be modified, so it's clear that only wrongful intentional acts and omissions apply.
- The physician should make sure that all parties involved have separate insurance policies. That way, in case of any liability, each party can avoid indemnifying each other in case property damages, injuries, or deaths occur from anyone associated with either or both parties.
Mutual Indemnity Clauses
A mutual indemnity clause is an agreement between two parties where both agree not to hold each other responsible for any losses or damages, regardless of who is at fault. It often appears in gas and oil contracts. When signing such an agreement, it is crucial to carefully assess the possibility for each side to cause any damages. That analysis can determine if a mutual indemnity clause benefits one party or the other, or if it is mutually beneficial. Obviously, if one party is much more prone to provoking liabilities, the clause is not a good idea for the other.
Advice for a Well-Written Independent Contractor Agreement
- A well-written contract should clearly specify the duties assumed by both parties. It is also crucial that no vague or ambiguous terms are used, as they can later be used against one party or the other. Every aspect of the collaborations should be written down in extensive detail.
- A contractor needs to be self-sufficient and to have full decision power on how they perform and deliver a service. For that reason, an important clause in the contract should specify that the client has employed an independent contractor that is solely responsible for his or her tax obligations.
- Intellectual property rights are also a very important part of the contract. Non-compete clauses, for example, may limit the independent contractor from working for another client, if the second client's activity interferes in any way with the first client's activity. It's best that such clauses are avoided by the contractor, as they may lose more from not being able to work for other clients than they gain by working with the one insisting on the non-compete clause.
Many clients insist on unilateral indemnification clauses, basically putting all potential liability solely on a contractor's shoulders. The latter should insist on a mutual indemnification clause, where both parties are responsible for liabilities that arise out of their own fault. Though the contractor's request may not be agreed to by the other party, it is important to try.
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