What is an indemnity anyway?

By Kit Burden 

There is a noticeable trend for the list of ‘indemnified’ losses in IT and outsourcing contracts to be getting longer and longer. Our commercial and business colleagues and clients can see the lawyers get very hot under the collar in arguing about them, and yet it can be difficult to articulate quite why this is an issue, especially when the lawyers themselves may not have a common understanding of what an indemnity actually ‘means’ in a contractual sense.

So is this all just a storm in a tea cup? The answer is — of course — ‘maybe’.

To start, one needs to assess what the more ‘traditional’ view may be as to the benefit that an indemnity clause may provide, as opposed to a pure damages claim…

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