What Does Indemnify Mean in Legal Terms

[Fact in brief: The word reparation comes from the Latin root indemnifies, which means unharmed, intact or without loss.] This means that if the snow removal company does not clear snow properly and someone slips, falls and chases the mall, it is the duty of the snow removal company to pay any financial compensation due. The introduction of compensation in contracts has certain advantages. The main benefit is reduced legal fees, as another party agrees to pay certain claims against you, which they might not be willing to do if such a clause were not in place. Compensating someone means that you are compensating someone for their damage or loss. In most contracts, there is an indemnity clause to pay one party for damages or losses caused by the other party. The objective is to transfer responsibility from one party to the other. The «defend, indemnify and hold harmless» phase is found in many, if not most, contracts with provisions on the allocation of responsibilities in various industries. However, many parties do not fully understand what exactly these words mean. The meaning of the three terms varies from state to state. Some States require that a person entitled to compensation be able to defend a person entitled to compensation. For example, an Oklahoma law on the interpretation of an indemnity agreement provides that, except as otherwise provided in the contract, «the indemnifying person shall, at the request of the indemnified person, defend any action or proceeding against the indemnified person with respect to the matters covered by the indemnification; But the indemnified person has the right to conduct such a defense if he chooses to do so. Some states, such as Ohio, consider the duties of defense and compensation to be completely separate. In addition, states like Colorado use «indemnify» and «indemnify» interchangeably.

Understanding the meaning of this common phrase in a particular state goes a long way in ensuring that the parties` decisions on risk allocation (and, ultimately, their economic agreement) are respected, which is important at best and crucial in the worst of times. A common example of compensation is insurance transactions. This often happens when, under an individual`s insurance policy, an insurance company agrees to compensate the insured person for losses incurred by the insured person as a result of an accident or property damage. In this type of agreement, Party A would bind insurance company B. If Party A and Party C are involved in an incident that results in property damage or bodily injury (e.g. a car accident), Insurance Company B assumes any liability for which Party A may be liable. After that, insurance company B would usually sue Part C for damages. An indemnification agreement often appears in the form of a User Agreement (GTC) in which the indemnifier, who is usually a customer of the indemnified beneficiary, agrees not to hold the indemnitee liable for any damage or loss that may result from the indemnitee`s use of the indemnitee`s goods or services. You`ve likely seen and entered into a number of compensation agreements when you had to agree to a company`s website terms of use before you could access their information, goods, or services online.

Some states, including Ohio, Colorado, Louisiana and Delaware, believe that «indemnify» and «indemnify» are synonymous. Alternatively, California views the two concepts as differently as in Homeowners Assn v. TCB Prop. In that case, the court classified the obligations of compensation and compensation into offensive and defensive rights. Compensation, the court said, is «an offensive right — a sword — that allows the person entitled to compensation to seek compensation.» On the other hand, compensation is a defensive measure that provides that «the right is not hindered by the other party itself, who seeks compensation». According to this view, an indemnified party protects against prosecution for liability that the other party may incur. Courts in Alaska, New Mexico, Oklahoma and West Virginia have not addressed the issue. Indemnification in contracts is essential to protect your business from negligent or nefarious third parties. An indemnification clause ensures that you do not suffer civil damages in several legal situations. Indemnification usually appears in the form of a clause or provision in a legal contract. An indemnification clause in a contract is a very important obligation because the person entitled to compensation waives his or her ordinary right under the law or waives the right to sue the indemnitee for compensation for a loss. Indemnification clauses are usually product- or circumstance-specific and apply to only one party, as the indemnitee waives the right to sue the indemnitee, but the indemnitee does not waive its right to sue the indemnitee.

Insurance companies compensate their policyholders for damage caused by fire, theft and flood, which are stipulated in the terms of the contract between the company and the insured. Indemnification clauses are also beneficial because they help define roles and responsibilities as part of a contractual agreement. They set expectations between the two parties, so that when something goes wrong, no one says, «Well, that wasn`t my responsibility.» Once you have clearly defined who is responsible for each part of the contract (and who is not), you will always have an agreed (and signed) document to refer to if these issues arise. By indemnifying the second party, the first party effectively undertakes to pay or indemnify any loss or damage that may occur. In other words, by agreeing NOT to hold the indemnitee (the party receiving or receiving the indemnification) liable, the indemnitee (the party providing the indemnification) effectively accepts that it is liable. If you`re a company that hires a lot of freelancers, contractors, and consultants, your insurance will likely be very narrow as to what it will cover. In these cases, indemnification clauses are essential for your business to minimize risk. Before drafting an indemnity clause, make sure you comply with all applicable laws. Compensation must always be prepared carefully, as ambiguities are often resolved by the courts in favor of the indemnifying party.

Calm down and get legal help with compensation by hiring contract lawyers from your state today. The obligation of defence triggers an obligation to act when a claim covered by the indemnification clause of the contract is asserted by a party against the person entitled to compensation. The independent obligation of defence requires that the person entitled to compensation effectively defends, finances or indemnifies the person entitled to compensation against a claim against him, regardless of the merits of the claim or outcome.