What does this clause do?:

In an agreement one party (or both parties) agree to reimburse the other party for any harm or loss or to release the party from any liability when an event occurs.

In simple terms one party will agree to take on the loss for the other or step into their shoes if they suffer a loss or a claim from a third party.  Indemnities can be expensive so they should be read carefully so you know what you are taking on.  All indemnities will be different depending on the contract and the relationship between the parties.

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In some cases you might want to get insurance to make sure that you are covered if you have to indemnify the other party.

Real life example:

You are a designer and create a logo for Wizard Potato Chips.  In your agreement with Wizard you agree to assign all copyright to them and that you have not infringed the intellectual property of any third party in designing the logo.  You also agree to indemnify them against any claims by third parties against them for use of the logo and agree to defend the court case on their behalf.  When designing the logo you copied an existing logo from Slays Chips.

Slays sues Wizard for copyright infringement.  You would be required to defend the court case on their behalf, pay the legal costs and, if Slays wins the case, pay any damages awarded against Wizard on its behalf.

Legislation:

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The Consumer Protection Act requires that any assumption of risk or limitation of liability is brought to the attention of a party when contracting. Make sure that you bring any indemnity clauses to the attention of the other party (if they are an individual or a company with a turnover less than R 2 million) or they may not be bound!  A good way to do this is to ensure that they sign along side it and that it is prominently worded.

Kleva sample wording:

the First Party will indemnify the Second Party, against all losses, excluding any indirect or consequential losses, and all liabilities, claims, actions, damages, expenses reasonably incurred and costs (including legal fees) arising out of or related to any breach of this Agreement by the First Party or any of its Representatives

 

 

 

 

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