Mutual indemnification

Mutual indemnification is a contractual provision where each party agrees to compensate the other for any losses, damages, or liabilities arising from specific actions or breaches related to the agreement. This clause is designed to ensure both parties are protected against claims or damages caused by the other party's negligence or misconduct.

12 Mutual indemnification examples

  • Description
    Mutual Indemnification. The Company and the Consultant agree to a mutual indemnification. The Consultant agrees to indemnify and hold harmless the Company, its partners, officers, directors, and employees, from the and against any losses, claims, damages, liabilities, and expenses whatsoever (including reasonable costs of investigation or defending any action) to which they or any of them may become subject under any applicable law arising out of Consultant’s performance under this Agreement. The Company agrees to indemnify the Consultant for all of the same issues and provisions described in this paragraph, which results in a mutual indemnification.
    Document
    Synergy CHC Corp. (SNYR)
  • Description
    The Purchase and Sale Agreement contains mutual indemnification obligations. Holdings has agreed to guaranty the Seller’s indemnification obligations. The closing of the transactions contemplated by the Purchase and Sale Agreement occurred on December 29, 2022.
    Document
    Benson Hill, Inc. (BHIL, BHILW)
  • Description
    Pursuant to the Merger Agreement, the Company and the Parent agreed to provide mutual indemnification to each other with respect to certain alleged representations, warranties or covenant breaches exceeding $100,000, but in no case exceeding $400,000. The Company also has the obligation to indemnify the Parent for any of LD Micro’s Indebtedness (as defined in the Merger Agreement) outstanding at the Closing.
    Document
    SRAX, Inc. (SRAX)
  • Description
    Also included in the Sponsorship Agreement is a mutual indemnification clause that covers breach, misrepresentation or non-performance under the Sponsorship Agreement, certain third-party claims and intellectual property claim or claim infringement.
    Document
    SRAX, Inc. (SRAX)
  • Description
    Mutual Indemnification. The Parties hereby agrees to indemnify, defend, and hold harmless the Buyer, its affiliates, officers, directors, employees, agents, successors, and assigns (collectively, the “Indemnified Parties”) from and against any and all losses, damages, liabilities, claims, actions, judgments, settlements, interest, awards, penalties, fines, costs, or expenses of whatever kind, including reasonable attorneys’ fees, that are incurred by the Indemnified Parties or awarded against them, arising out of or resulting from any claim of a third party alleging: (a) any breach of the Party’s representations, warranties, covenants, or obligations under this Agreement; (b) any negligence or more culpable act or omission of the Party (including any recklessness or willful misconduct) in connection with the performance of its obligations under this Agreement; (c) any bodily injury, death of any person, or damage to real or personal property resulting from the acts or omissions of the Seller; or (d) any failure by any Party to comply with any applicable laws and regulations. The indemnification rights of the Indemnified Parties under this clause are in addition to any other rights they may have under this Agreement or any applicable laws. The obligations under this indemnity will survive the termination of this Agreement and the closing of the transactions contemplated hereby
    Document
    TRxADE HEALTH, INC (MEDS)
  • Description
    The Merger Agreement also contains mutual indemnification obligations for breaches of representations and warranties and failure to perform covenants and obligations contained in the Merger Agreement.
    Document
    1847 Holdings LLC (EFSH)
  • Description
    Either party may terminate the Agreement upon 30 days’ written notice if the Interim Project is not completed within two years of execution of the Agreement. The Agreement also contains customary representations, warranties, covenants and confidentiality provisions, and also contains mutual indemnification obligations. 
    Document
    Gevo, Inc. (GEVO)
  • Description
    The Purchase Agreement also contains mutual indemnification for breaches of representations or warranties and failure to perform covenants or obligations contained in the Purchase Agreement. In the case of the indemnification provided by the Sellers with respect to breaches of certain non-fundamental representations and warranties, the Sellers will only become liable for indemnified losses if the amount exceeds an aggregate of $25,000, whereupon the Sellers will be liable for all losses that exceed the $25,000 threshold, provided that the liability of the Sellers for breaches of certain non-fundamental representations and warranties shall not exceed 10% of the Purchase Price. The Sellers’ aggregate liability for fraud or for the breach of fundamental representations shall be limited to the Purchase Price.
    Document
    1847 Holdings LLC (EFSH)
  • Description
    The Agreement contains certain customary representations, warranties, covenants and confidentiality provisions, and also contains mutual indemnification obligations. All SAF delivered by Gevo shall meet the quality specifications established in the Agreement.
    Document
    Gevo, Inc. (GEVO)
  • Description
    The Master Services Agreement also includes customary provisions relating to, among others, compliance with laws, non-solicitation of employees, insurance requirements, mutual indemnification, confidentiality, and audit and inspection procedures.
    Document
    WESTWATER RESOURCES, INC. (WWR)
  • Description
    Mutual Indemnification Each party shall indemnify and hold harmless the other party from all losses and damages incurred in connection with its respective acts or omissions in connection with the Agreement.
    Document
    Akerna Corp. (GRYP)
  • Description
    The RCA contains standard confidentiality provisions and representations and warranties made by each party to the agreement. The parties also provide mutual indemnification under the agreement and the RCA excludes liability of either party for consequential or similar damages, except to the extent prohibited by law.
    Document
    Exscientia plc (EXAI)

What is Mutual Indemnification?

Mutual indemnification is a contractual provision in which each party agrees to compensate the other for certain damages or losses that may arise during the course of their agreement. It serves as a risk management tool, protecting the parties from liability for certain actions or occurrences. The mutual aspect means that both parties have indemnification obligations towards each other, promoting a balance in responsibility and risk allocation.

When should I use Mutual Indemnification?

Mutual indemnification is commonly used in business agreements where both parties have potential liability exposure. It’s particularly advantageous when:

  • Both Parties Are Exchanging Goods or Services: When each party has responsibilities that may lead to potential claims, mutual indemnification ensures fairness.
  • Parties Are Looking to Balance Risk: It’s used to ensure no single party bears an unfair share of liability.
  • There Is a Need for Reciprocal Legal Coverage: In industries with high litigation risks, such as technology, construction, or manufacturing, mutual indemnification is often utilized.

How do I write Mutual Indemnification?

When writing a Mutual Indemnification Clause, the goal is to outline the obligations of each party to protect and compensate the other in case of losses, damages, or liabilities arising from certain actions or omissions. Here are the key elements to include:

Scope of Indemnification: Clearly specify that each party agrees to indemnify, defend, and hold the other party harmless from any claims, damages, losses, or expenses (including legal fees) that arise due to the actions, omissions, or negligence of the indemnifying party. Define the situations where indemnification applies, such as breach of contract, violation of laws, or third-party claims.

Reciprocal Obligations: Make it clear that the clause is mutual, meaning that both parties have the same obligations to indemnify each other. Use similar wording for each party’s obligations to ensure balance and fairness.

Limitations and Exclusions: Include any exclusions or limitations to the indemnification obligations, such as specifying that the indemnity does not apply in cases of gross negligence, willful misconduct, or where the claim arises solely due to the indemnified party’s own actions.

Here is a basic template:

Mutual Indemnification Clause: Each party (the “Indemnifying Party”) agrees to indemnify, defend, and hold harmless the other party (the “Indemnified Party”), its affiliates, officers, directors, employees, and agents from and against any and all claims, damages, liabilities, costs, and expenses (including reasonable attorneys’ fees) arising out of or related to: (a) any breach by the Indemnifying Party of its representations, warranties, or obligations under this Agreement; and (b) any act or omission of the Indemnifying Party in the performance of its obligations under this Agreement.

Be sure to adjust the clause to reflect the specific risks and liabilities relevant to your agreement and consult with legal counsel to ensure compliance with applicable laws.

Which contracts typically contain Mutual Indemnification?

Mutual indemnification clauses are common in several types of contracts, including:

  • Service Agreements: Especially in contracts involving the outsourcing of services or collaboration.
  • Supply Contracts: Where goods are exchanged, and there is potential for defects or breach.
  • Technology Agreements: Including software licensing and SaaS agreements, where both parties might have liability for infringement or data breaches.
  • Joint Ventures and Partnerships: Where both parties contribute resources and assume responsibilities.

By including mutual indemnification, these agreements can better manage and allocate the risks associated with each party’s activities.

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Dive deeper into the world of clauses and learn more about these other clauses that are used in real contracts.

Mutual indemnity

A mutual indemnity clause is an agreement between two parties where each agrees to indemnify, or compensate, the other for certain losses or damages arising from their own actions or negligence. This clause is intended to ensure fairness and risk distribution, protecting both parties from liabilities resulting from the other's conduct during the execution of a contract.

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Mutual limitation of liability

A mutual limitation of liability clause establishes a cap on the amount of damages that either party to a contract can claim from the other in the event of a breach or other issues arising out of the contract. This clause is designed to protect both parties by minimizing their financial exposure and encouraging fair and manageable risk distribution.

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Mutual nondisparagement

A mutual nondisparagement clause is an agreement between parties where each agrees not to make negative or disparaging statements about the other. This clause is designed to protect the reputation of both parties by preventing harmful public comments or criticisms.

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