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Indemnities are an important tool for managing risk in commercial Contracts. They are often fiercely negotiated and are frequently the subject of judicial scrutiny. They vary enormously in their language, scope and use but they should not be drafted, reviewed or negotiated without a clear understanding of the principles that have emerged from the case law around them.

An indemnity clause should not be considered in isolation. It should be viewed as part of a suite of potential remedies, with a clear understanding of the distinctions between them and how they may interact. An indemnity clause should be reviewed in the context of the whole agreement together with external factors, such as the circumstances of the agreement and insurance, in order to fully appreciate and advise on the management of the risk to be protected.

This Practice Note is primarily focused on indemnity clauses in general commercial contracts but it includes references and links to other forms of indemnity for further research.

For an example indemnity clause with drafting notes for use in a business-to-business commercial contract,