Indemnity clause - would you sign it?
Thread poster: Claudia Digel
I know similar questions about indemnity clauses have been asked before but this time it's not a contract with an agency but with a direct client, which might make a difference.
I have received a contract containing the following indemnity clause:
...Contractor agrees to indemnify, pay the defense costs of, and hold XXX and its successors, officers, directors and employees harmless from any and all actions, causes of action, claims, demands, costs, liabilities, expenses and damages (including attorneys' fees) arising out of, or in connection with (i) any claim for bodily injury, death, or property damage to the extent caused by Contractor in connection with the Services or the Work, (ii) any claim that the Work, or any part thereof, infringes any copyright, patent, trade secret, trademark, or other legal right of any third party, or (iii) any other claim that, if true, would constitute a breach of Contractor’s warranties set forth in Section 4 above...
This comes from a software company and they do have internal QA procedures, so I don't see why all the responsibility should be mine and I don't think I will sign the contract. Still, I was wondering if someone else has been in a similar situation and has signed or would sign something similar?
Thanks and regards,
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| It seems unnecessary || Jun 14, 2006 |
The clause seems to me to be simply unnecessary, or large parts of it anyway. I would not personally agree to sign it, because I would not see why I should act as a free form of insurance for the company. Why can't they pay for insurance?
However, signing it would quite likely do no harm, because I also think that most, or all, of it may be legally invalid. Of course, that is only my opinion. By way of analogy, there are also many clauses in a lease that you have to sign to get a new flat that are legally invalid and cannot in fact be implemented. I would not be surprised if the case were similar.
I do not know how much money the job is worth to you, and how many other clients or sources of income you have. If you need to earn the money, I presume that there would be practically no risk involved in signing it. It is more the attitude of the company that is not very nice.
| absolutely not || Jun 14, 2006 |
This puts you on the hook for their legal expenses, even if the claim asserted against XXX has no merit:
Contractor agrees to ... pay the defense costs of ... all actions ... arising out of, or in connection with ... any other claim that, if true, would constitute a breach ...
It may be, as Astrid suggests, that the clause is unenforceable, but you would have to consult a lawyer to be sure.
| Probably just their standard terms || Jun 14, 2006 |
I've just translated an almost identical clause in the contract that a leading IT services company asks its subcontractors (not me - it's intended for other IT services companies) to sign. The idea is that the company is not liable if the work/service provided is shoddy, dangerous, stolen from someone else, etc.
From a translation point of view, I would certainly ask them to remove the second part, about copyright, since I don't think it should be up to you to check this, and I believe that translation *can* be interpreted as breach of copyright/intellectual property. And the third part rather depends on the warranties in section 4, but might be relevant if you're translating instructions to operate dangerous machinery, or something.
Anyway, I just wanted to say that a) they've probably just sent you a standard contract, and b) you should probably ask for ii) to be removed.
| | Miriam Delgado
Local time: 04:07
Spanish to English
| Don't sign it || Jun 14, 2006 |
Unless you have errors and omissions insurance, don't sign the contract! This indemnity clause is overkill and puts all the responsibility for ANY problems on you. Not only does it saddle you with liability for any damages suffered by the primary client, but also with liability for any damages suffered by ANYONE who uses the primary client's product.
| | teju
Local time: 05:07
English to Spanish
| I agree with Lothar, absolutely not || Jun 14, 2006 |
I've never heard of such a thing. If you don't want to lose the client, at least consult with an attorney before signing anything. Even if (and that's a big IF) this clause is not enforceable, the fact that it exists could cause you a lot of problems if something happens. You could be tied up in litigation just to prove that the clause was unenforceable, and who wants that?
You are exposing yourself to a huge problem in the future, should someone decide to sue. That's a big cloud hanging over your head. I say peace of mind is more important. Good luck to you.
| | Angela Dickson
Local time: 12:07
French to English
(iii) any other claim that, if true, would constitute a breach of Contractor’s warranties set forth in Section 4 above...
Now I'm not a lawyer but this appears to include any and all claims including those that are not true. Mind you, getting this changed would probably not be worth the time and effort - could you argue that you are a special case among their suppliers and therefore don't need to sign it?
| | Claudia Digel
Local time: 13:07
English to German
| I definitely won't sign it || Jun 15, 2006 |
Thank you all for your comments which absolutely confirm what I was thinking. I definitely won't sign the contract if this paragraph doesn't get deleted first.
It is a very big company and I assume they have sent out this contract hundreds of times and other contractors have probably signed it, so I doubt I will get them to alter it, but I will give it a try.
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Indemnity clause - would you sign it?
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