An Overview of Indemnity Agreements

The phrase indemnity agreement sounds ominous, but don’t let the intimidating name scare you. Indemnity agreements are actually very common. In fact, you’ve probably signed several of these agreements before, but you just don’t know them by this name. Here’s more about what indemnity agreements are and why you would sign one.

What Is an Indemnity Agreement?

Many people know of indemnity agreements by a different name: a “Hold Harmless Agreement.” If you’ve ever participated in an exercise class or bought a ticket to a baseball game, you’ve probably signed a Hold Harmless Agreement. It’s very common for businesses to use these agreements as a way to ensure that if you get hurt, they are not responsible for your injury.

An indemnity agreement is a contract that releases someone (a business normally) from any responsibility for any wrongdoing, accident, or injury that may occur on their premises or under their watch.

Let’s take the baseball ticket purchase as an example. In the fine print, it says that your purchase of the ticket serves as your signature to “hold harmless” Major League Baseball and anyone who could possibly be associated with the league, the team or the ballpark. This means that if you get hit in the head with a ball and have to go to the doctor, you may be prevented from making claims against any of these parties. By purchasing the ticket, you are agreeing to this.

Where Else Can You Find Indemnity Agreements?

You can probably think of a number of instances where you might have unwittingly signed an indemnity agreement. However, indemnity agreements are also very common in business contracts. In this case, the indemnity agreement serves as a sort of warranty.

Let’s say you’re creating a new product for a company. They might include an indemnity clause in the contract. This way, if someone came forward and said your product was a copy of their patented product, you would be responsible (and not the company who purchased the product from you).

Or let’s say you make a toy. A company that sells a variety of toys approaches you to sell your toy. In your contract, they may want you to sign an indemnity waiver. This says that the vendor of your toy is not liable for any lawsuits that may arise because of your toy. So, if another toymaker claimed that your toy was a copy of their patented toy and sued the company selling it, you would be the one responsible for any legal fees or damages awarded by the court.

Why Would You Sign an Indemnity Agreement?

Only sign an indemnity agreement if you completely understand it. To do this, you need to fully comprehend what you are promising and the potential consequences if things go poorly. If you have an indemnity clause in a contract, have an attorney to review it.

Contact Cove Law for assistance. Our qualified Florida business law attorneys are happy to help you fully understand any contracts before you sign them. Give us a call at (954) 921-1121 today!

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Written by Andrew Cove

Cove Law has significant experience defending federal investigations and formal actions by the Federal Trade Commission, the Consumer Finance Protection Board and the U.S. Department of Justice, as well as similar matters on the state level by the respective state Attorney General’s Offices and other local agencies.