Which Clause Should You Include? The decidedly unhelpful answer to this question is “It depends.” The type of clause you want in your contract heavily depends on your role. For example, a subcontractor is always going to prefer a limited form indemnity clause when contracting with a general contractor. A flooring retailer, however, is likely to prefer an intermediate form clause when selling to a contractor or installer. Which clause you prefer will depend upon your role and the potential risks. What Are Anti-Indemnity Statutes? Many states have enacted anti-indemnity statutes to limit or prohibit overly broad indemnity clauses. These laws are designed to ensure fairness by preventing one party from bearing all the risk. Anti-indemnity statutes vary greatly from state to state and are regularly amended. Understanding the laws in the states where you work is essential. Regardless of state law, the best practice is to negotiate reasonable indemnity agreements whenever possible. How Does Indemnity Relate to Defense? Indemnifying and defending are two separate but related concepts. Indemnifying means paying the loss, which can sometimes include attorneys’ fees. Defending means hiring and paying for lawyers to fight the underlying claim as soon as notice of the claim is given. Many indemnity clauses include an obligation to defend. For the indemnitor, taking on the defense can be both a burden and a benefit. It is a burden because the costs of defending may be higher than the loss itself, but it is a benefit because it can allow the indemnitor the ability to control its own destiny. For an indemnitor, the worst type of indemnity clause is one that requires it to pay for the defense but allows the indemnitee to control the defense and settlement. Of course, that is the best type of clause for an indemnitee.
50 Premier Flooring Retailer TISE | 2025
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