Indemnity Sample Clause: Examples and Drafting Guide (2026)

An indemnity sample clause is one of the most frequently requested provisions in contract drafting. Indemnity clauses allocate risk between contracting parties by requiring one side to compensate the other for specified losses, damages, or third-party claims. Getting this clause wrong can expose your business to unlimited liability or leave you unprotected when a third-party lawsuit arrives.

This guide provides practical indemnity clause examples for different business contexts, explains the legal mechanics behind each provision, and walks through key drafting considerations. This content is educational and does not constitute legal advice. Have a qualified attorney review any indemnity language before including it in your contracts.

What Is an Indemnity Clause

An indemnity clause (also called an indemnification provision or hold harmless clause) is a contractual term where one party agrees to compensate the other for certain costs, losses, or damages. The party providing the protection is the "indemnifying party," and the party receiving protection is the "indemnified party."

In practical terms, an indemnity clause answers one question: if something goes wrong, who pays? When a customer sues your client over a product you supplied, the indemnity clause in your contract determines whether you or your client bears the legal costs and any resulting damages.

Indemnity clauses are distinct from warranties and limitation of liability provisions, though they work together:

• Warranty: A promise that something is true (e.g., "the software does not infringe third-party IP")
• Indemnity: An obligation to compensate if that promise is broken and a third party brings a claim
• Limitation of liability: A cap on total financial exposure under the contract

Most commercial contracts include all three. The indemnity clause is the mechanism that shifts financial responsibility for third-party claims to the party best positioned to prevent or control the underlying risk.

Types of Indemnity Clauses

Not all indemnity clauses work the same way. Understanding the different types helps you select the right structure for your agreement.

Unilateral indemnity

Only one party indemnifies the other. This is common in contracts where the risk profile is asymmetric, such as a software vendor indemnifying a customer against IP infringement claims. The vendor is in the best position to ensure its software does not infringe, so it bears the risk.

Mutual indemnity

Both parties indemnify each other for specific risks. Each party covers losses caused by its own actions, breaches, or negligence. Mutual indemnity is standard in partnerships, joint ventures, and SaaS agreements where both sides contribute content, data, or services.

Broad form indemnity

The indemnifying party covers losses even if the indemnified party was partially at fault. Broad form indemnities are increasingly disfavored by courts and are prohibited by statute in some U.S. states (particularly in construction contracts). Several states, including Texas, Louisiana, and New York, have anti-indemnity statutes that void broad form indemnity provisions in specific contexts.

Limited or comparative indemnity

The indemnifying party only covers losses proportional to its own fault. This is the most balanced approach and the most likely to survive judicial scrutiny. Courts generally prefer indemnity provisions that align responsibility with fault.

Indemnity Sample Clause Examples

Below are practical examples of indemnity clauses for common business agreements. Each example is followed by an explanation of its key components.

SaaS and software agreement

The Vendor shall indemnify, defend, and hold harmless the Customer and its officers, directors, employees, and agents from and against any third-party claims, actions, suits, or proceedings alleging that the Customer's authorized use of the Service infringes or misappropriates any third-party intellectual property rights. The Vendor shall pay all resulting damages, costs, and reasonable attorney fees finally awarded by a court of competent jurisdiction or agreed to in a written settlement approved by the Vendor.

This is a standard IP indemnity in SaaS contracts. It is unilateral (only the vendor indemnifies), limited to IP infringement claims, and scoped to "authorized use" of the service. The phrase "finally awarded by a court" prevents the indemnified party from settling a claim at an inflated amount and demanding reimbursement.

Ecommerce and marketplace terms

The Seller shall indemnify and hold harmless the Marketplace Operator from any claims, liabilities, damages, or expenses (including reasonable legal fees) arising out of or related to (a) any product sold by the Seller through the Marketplace, including product liability and consumer protection claims, (b) any breach of the Seller's representations or warranties, or (c) the Seller's violation of applicable law.

Marketplace operators use this type of clause to ensure sellers bear responsibility for their own products. If you run an ecommerce site, your terms of service should include an indemnity provision covering user-generated content and third-party product claims.

Professional services agreement

Each party (as "Indemnifying Party") shall indemnify and hold harmless the other party (as "Indemnified Party") from and against any losses, damages, liabilities, costs, and expenses (including reasonable attorney fees) arising from (a) the Indemnifying Party's breach of this Agreement, (b) the Indemnifying Party's negligence or willful misconduct, or (c) the Indemnifying Party's violation of applicable law. This indemnification obligation shall survive the termination or expiration of this Agreement.

This is a mutual indemnity clause. Both parties cover the other for their own breaches, negligence, and legal violations. The survival clause ensures the indemnity continues after the contract ends, which is important because third-party claims often arise months or years after the underlying event.

Website terms of service

You agree to indemnify and hold harmless [Company Name], its affiliates, and their respective officers, directors, employees, and agents from any claims, damages, losses, or expenses (including reasonable legal fees) arising from your use of the Service, your violation of these Terms, your violation of any third-party rights, or any content you submit through the Service.

This user-facing indemnity is common in website terms of service. It requires users to cover the company for losses caused by the user's actions. While widely used, the enforceability of broad indemnity clauses in consumer-facing terms varies significantly by jurisdiction.

Key Components of an Effective Indemnity Sample Clause

When drafting or reviewing an indemnity clause, pay attention to these specific elements. Each one affects the scope, enforceability, and practical operation of the provision.

Defined triggering events

The clause must clearly state what events trigger the indemnity obligation. Vague language like "any claim related to the agreement" creates ambiguity that leads to disputes. Specific triggers are stronger:

• Third-party IP infringement claims
• Breach of specific representations or warranties
• Violation of named laws or regulations
• Negligence or willful misconduct
• Data breach caused by the indemnifying party
• Product liability claims

Scope of covered losses

Define exactly what the indemnifying party must pay. Common formulations include:

• Narrow: "damages finally awarded by a court"
• Moderate: "damages, costs, and reasonable attorney fees"
• Broad: "any and all losses, damages, liabilities, costs, expenses, penalties, fines, and reasonable attorney fees"

The broader the scope, the greater the financial exposure for the indemnifying party.

Defense and control provisions

Specify who controls the legal defense of a claim:

1. Indemnifying party controls defense: The indemnifying party selects counsel and manages the litigation. The indemnified party cooperates. This is standard in vendor IP indemnities.
2. Indemnified party controls defense: The indemnified party manages the case and seeks reimbursement. This gives more control but requires upfront spending.
3. Shared control: The indemnified party may participate in the defense at its own expense, with the indemnifying party retaining control of key decisions.

Notice requirements

Most indemnity clauses require the indemnified party to notify the indemnifying party promptly upon learning of a claim. Failure to provide timely notice can reduce or eliminate the indemnity obligation. Specify the notice timeframe and method (e.g., written notice within 30 days to a designated address).

Settlement authority

Clarify whether the indemnifying party can settle claims without the indemnified party's consent. A common compromise is that the indemnifying party may settle without consent only if the settlement fully releases the indemnified party and does not require the indemnified party to admit fault or take action beyond ceasing use of the infringing item.

Indemnity Clause Enforceability by Jurisdiction

The enforceability of an indemnity sample clause depends heavily on the governing law of the contract and the nature of the parties involved.

United States

In the U.S., indemnity clauses in commercial contracts between businesses are generally enforceable, subject to state-specific restrictions. Key considerations include:

• Anti-indemnity statutes: At least 43 states have some form of anti-indemnity statute, primarily targeting construction contracts. States like Texas (Chapter 151 of the Insurance Code), New York (General Obligations Law Section 5-322.1), and California (Civil Code Section 2782) restrict or void certain types of broad indemnity provisions.
• Consumer contracts: Courts apply heightened scrutiny to indemnity clauses in consumer-facing agreements. Clauses that are buried in dense terms of service, overly broad in scope, or unconscionable may be struck down.
• Negligence standard: Some states require clear and unequivocal language to indemnify a party against its own negligence. Ambiguous drafting defaults to excluding coverage for the indemnitee's own fault.

European Union

EU law generally allows indemnity clauses between businesses, but consumer protection regulations impose strict limits. Directive 93/13/EEC on unfair terms in consumer contracts treats broad indemnity clauses as presumptively unfair. Member states implement this directive through national legislation.

United Kingdom

English common law recognizes and enforces indemnity clauses, but the Unfair Contract Terms Act 1977 (UCTA) and the Consumer Rights Act 2015 impose limits. Under UCTA, clauses that attempt to exclude or restrict liability for negligence must satisfy a reasonableness test. Consumer indemnity clauses must pass a fairness assessment.

Common Mistakes in Indemnity Clauses

Reviewing hundreds of contracts reveals recurring errors in how indemnity clauses are drafted. Avoiding these mistakes strengthens your position and reduces the risk of unenforceable provisions.

Being too broad or too vague

An indemnity clause that covers "any and all claims of any nature whatsoever" is more likely to be challenged as unconscionable, particularly in consumer contracts. Courts prefer specificity. List the actual risks you want covered rather than using catch-all language.

Forgetting to include defense obligations

"Indemnify and hold harmless" without "defend" creates ambiguity about whether the indemnifying party must actively defend claims or merely reimburse losses after the fact. Including "defend" explicitly obligates the indemnifying party to hire counsel and manage the defense.

Omitting survival clauses

If your contract does not state that the indemnity survives termination, some jurisdictions may treat the obligation as ending when the contract ends. Third-party claims frequently surface after a business relationship has concluded, so a survival clause is essential.

No cap on indemnification

Uncapped indemnity obligations create unlimited exposure. Unless you have strong negotiating reasons to demand uncapped indemnity (such as IP infringement by a vendor), including a reasonable cap protects both parties. Common caps include total fees paid in the preceding 12 months or a fixed multiple of the contract value.

Ignoring insurance requirements

An indemnity clause is only as strong as the indemnifying party's ability to pay. Requiring the indemnifying party to maintain adequate insurance coverage (general liability, professional liability, cyber liability) provides a financial backstop for the indemnity obligation.

How to Include Indemnity in Your Terms of Service

If you operate a website or online service, your terms of service should include an indemnity provision that covers common risk scenarios. The clause should be proportionate to the risks your platform faces.

For most websites and SaaS products, the core indemnity should cover:

• User violations of your terms of service
• User-generated content that infringes third-party rights
• User violations of applicable law while using your service
• Misuse of your platform in ways that create liability for your business

When drafting your terms of service, a terms and conditions generator can produce a baseline indemnity clause appropriate for your business type. You should then have an attorney review the output to ensure it aligns with your specific risk profile and the laws of your jurisdiction.

Keep these principles in mind when adding indemnity language to consumer-facing terms:

1. Use plain language. Courts are more likely to enforce clauses that a reasonable person can understand. "You agree to cover our legal costs if someone sues us because of something you did" is clearer than dense legalese.
2. Be specific about triggers. List the specific actions or events that create the indemnity obligation rather than using broad, undefined language.
3. Consider your audience. If your users are consumers rather than businesses, courts in many jurisdictions will apply stricter fairness standards. A clause that is perfectly enforceable in a B2B SaaS contract may be struck down in a consumer app's terms of service.
4. Comply with local law. If you serve users in the EU, UK, Australia, or other jurisdictions with strong consumer protection laws, your indemnity clause must satisfy the fairness tests applicable in those regions.

Your terms of service should work as a coherent document where the indemnity clause integrates with your limitation of liability, warranty disclaimers, and dispute resolution provisions.

Indemnity Sample Clause Checklist

Use this checklist when reviewing or drafting an indemnity provision to ensure nothing critical is missing:

• Triggering events are specifically defined (not catch-all language)
• The scope of covered losses is clearly stated (damages, fees, costs)
• Defense obligations are explicitly included ("indemnify, defend, and hold harmless")
• Notice requirements are specified (timeframe, method, consequences of late notice)
• Settlement authority is addressed (who can settle, consent requirements)
• Control of defense is assigned (who selects counsel, who makes strategic decisions)
• Indemnification caps are included where appropriate
• Carve-outs from caps are clearly listed (e.g., IP infringement, confidentiality breach)
• Survival clause ensures the obligation continues after termination
• Insurance requirements are specified if the indemnifying party is a vendor or contractor
• The clause complies with applicable anti-indemnity statutes
• Consumer protection laws are considered if the agreement is consumer-facing

Frequently Asked Questions

What is the difference between indemnity and a limitation of liability?

An indemnity clause requires one party to compensate the other for specific losses caused by third-party claims or defined events. A limitation of liability clause caps the total amount one party can owe the other for any claims under the contract. They serve different purposes: indemnity shifts the cost of third-party claims to the responsible party, while limitation of liability sets a ceiling on overall exposure. Most commercial contracts include both provisions working together.

Can an indemnity clause be enforced against consumers?

In many jurisdictions, indemnity clauses in consumer contracts face significant enforceability challenges. Under EU Directive 93/13/EEC on unfair terms, a broad indemnity clause in a consumer contract is likely to be deemed unfair and therefore unenforceable. In the UK, the Consumer Rights Act 2015 subjects such clauses to a fairness test. In the United States, enforceability varies by state, but courts routinely strike down indemnity clauses in consumer agreements that are overly broad or buried in fine print.

Should an indemnity clause include a cap on liability?

For the indemnifying party, including a cap is advisable to limit maximum exposure. Common approaches include capping indemnification at the total fees paid under the contract over the preceding 12 months, or at a fixed dollar amount. However, certain obligations are frequently carved out from caps, such as indemnification for intellectual property infringement or breaches of confidentiality. Whether to include a cap depends on the risk profile and negotiating leverage of each party.

What triggers an indemnity obligation?

An indemnity obligation is typically triggered when a third party brings a claim against the indemnified party for something the indemnifying party caused or is responsible for. Common triggers include intellectual property infringement, breach of confidentiality, violation of applicable laws, negligence or willful misconduct, and breach of representations and warranties in the contract. The indemnity clause should clearly define the triggering events to avoid disputes about scope.