When entering into a business contract, it is important to have an indemnification agreement in place to protect all parties involved. An indemnification agreement is a legal contract that transfers risk from one party to another. The purpose of this agreement is to protect one party from losses or damages caused by the other party.
There are different types of indemnification agreements, each with its own form. Here are some forms of indemnification agreement you should know:
1. Broad Form Indemnification Agreement
This type of indemnification agreement is the most comprehensive. It includes a broad range of risks and damages. The broad form indemnification agreement may include home, property damage, personal injury, and even death.
2. Intermediate Form Indemnification Agreement
The intermediate form indemnification agreement covers losses that occur as a result of the indemnitor’s actions or inaction, as long as the indemnitor was partially at fault.
3. Limited Form Indemnification Agreement
The limited form indemnification agreement only covers losses that result from the indemnitor’s actions or inaction. It does not cover losses that result from any other cause. This agreement is commonly used in construction contracts.
4. Comparative Form Indemnification Agreement
In this type of indemnification agreement, the parties agree to share the cost of damages based on their respective level of fault. It is usually used in cases where both parties are partially at fault.
5. No-Fault Indemnification Agreement
The no-fault indemnification agreement states that each party will be responsible for its own losses and damages regardless of fault.
When drafting an indemnification agreement, it is important to keep in mind the following considerations:
– The agreement should be clear and specific about which party is responsible for what risks and damages.
– The agreement should be written in plain language that is easy for both parties to understand.
– The indemnification agreement should be reviewed by an attorney to ensure that it is legally enforceable.
– The agreement should be updated periodically to reflect any changes in the business relationship between the parties.
In conclusion, an indemnification agreement is an important tool in protecting all parties involved in a business contract. You should consider the different forms of indemnification agreement and draft one that meets your specific needs. Remember, an indemnification agreement is legally binding, so it is important to seek legal counsel before signing one.
