Have you ever seen the term indemnify and wondered what it means in the context of business contracts? Understanding indemnify is fundamental to protecting your business and averting manageable risks. This article outlines the meaning of indemnify and presents strategies entrepreneurs can use to protect their business from potential liability.
What Does ‘Indemnify’ Mean?
Indemnify means “to hold harmless; to secure someone from loss”. In a legal context, it typically implies that a party (known as the “indemnitor”) will compensate the other party (known as the “indemnitee”) for any losses or damages incurred as a result of a specific incident. For example, if a business contracted with a service provider to build an ecommerce platform and the service provider built a subpar website, the business may be able to collect damages from the service provider if they had an “indemnify” clause in their contract.
Best Practices: Protect Your Business With Indemnify Clauses
Many entrepreneurs include indemnify clauses in their business contracts as a form of risk management. To properly protect your business, work with an experienced attorney to draft contracts that clearly define the expectations of the parties involved and ensure that the indemnify clause is worded clearly and accurately. It’s also important to ensure that the indemnify clause includes specifications on the types of damages that can be covered and the processes and procedures that must be followed in order for the indemnitee’s losses to be compensated. It’s best to avoid using language that is too general or ambiguous, as this can lead to potential issues down the line.
Conclusion
Indemnify clauses are often used in business contracts as a way to protect a company’s interests and manage certain risk factors. By understanding what indemnify means and ensuring that your contractual protections are sound, you can help shield your business from costly damages. To ensure that all of your business contracts are watertight, seek the assistance of a qualified attorney.