What does indemnity mean?

• Simply put, to hold harmless, or indemnify, means to release the other party from all expenses, including legal fees, expert witness fees, judgments, and settlements in the event that any legal action is taken against the venture.
  
  

What is covered?

• Dependent upon the type of agreement entered into, virtually all expenses pursuant to a lawsuit, including any breach of contract claims, can be covered by this type of clause.
  
  

What is not covered?

• Some state and federal statutes prevent liability and negligence from being indemnified fully. Additionally, losses incurred from acts of fraud, laundering, and other various types of criminal activity cannot be covered through the use of an indemnity clause.
  
  

Structure

• The basic structure is relatively simple and generally reads, "Party A agrees to indemnify and hold harmless Party B." That being said, the entire clause is much longer and more detailed as it will also include and list specifically the officers, managers, executives, owners, heirs, shareholders, and board members of the organization protected. Furthermore, the clause should contain some specific wording as to the exact nature of what expenses are included in the Hold Harmless Agreement. Failure to fully outline the expenses included can, and often does mean that all expenses are included whereas, specifying such detail in this clause would limit the risk exposure to the indemnifying party.
  
  

Where are they found?

• All professionally written contracts and agreements will have some type of hold harmless clause. As a general practice, these clauses are specifically labeled by paragraph, but that is not always the case. It is typical to find these clauses near the choice of venue clause in the contract.