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There seems to be an unhealthy fear of contracts or legal language.  I am a Contract Manager for a multi-national engineering company and people come to me all the time, asking me to unravel or interpret a sentence or paragraph that is written in plain English. 

There is no magic in the words.  It is all in plain English, you just need to take the time to read through the words and make sure that they are accurately depicting what you want them to.

Below is a typical contractual indemnity clause:

The Vendor shall indemnify, defend and hold harmless the Company from and against any and all Claims that the Company suffers or incurs, directly or indirectly, which are attributable to the Work.   

What is this really saying?

Well what does the word indemnify mean?

Indemnify – To guard or secure against anticipated loss.

So the Vendor is supposed to guard, secure against loss and hold harmless the Company, but from what?

From all Claims

What is a claim?

Claim – a demand for something as due; an assertion of a right or an alleged right.

For example, if you owe me money and you have not paid, I can make a claim (or a demand that the money is due).

Now we have to ask ourselves what the next part is saying.  And this is the part that requires some review. 

The rest of the sentence reads “…all Claims that the Company suffers or incurs, directly or indirectly, which are attributable to the Work”.

If we are the Vendor we should be asking ourselves what this means.

If we were conversing with the Company we might ask the following question:

So you’re saying that I am going to indemnify and hold you harmless for any claim that arises out of what I’m doing, whether it is a direct claim or an indirect claim?

Then the Vendor should then ask how much control he has over what he is doing.

If I am a copy machine repair man and I am entering the premises of the Company to work on a machine, it means that I and my company will be responsible for any claim related to me fixing the machine. 

So if I have the machine open, with electrical parts exposed, and while I’m in the bathroom, an employee of the company, who thinks he knows about copy machines, starts playing around, electrocutes himself and dies.  I am responsible.

Why?

Because I said that I would indemnify and hold the company harmless.

The most important thing about reviewing any indemnity clause is to have a very good idea of what work is actually being performed under the contract, how much control you have over the work (or any possible hazards that might result from it) and how much control the other party to the contract has over the work or the environment under which the work will be performed. 

Once you have a good idea, you can begin to change the language of the contract to fit the particular job that you are doing.