To understand the indemnification agreement, it is necessary to understand the term indemnity. The term indemnity is referred to as they make good of any loss that is done by any other person. In other words, to make compensation on the behalf of others for any loss, damage or liability is called indemnity. For example, a worker that gets injured during his duty can claim the compensation from the company. The company will compensate for this damage to health due to indemnity. It is also called as “hold harmless”
What is Indemnification Agreement?
The indemnity agreement is a legal document between two parties, the Indemnitee and the indemnifier, usually employee and employer or company and the contractor. This agreement shows the acceptance of one party for the compensations for other party’s damages or claims during a project or a fixed period of time. This agreement allocates the liability to the party which is more solid to control the risks in a project. Companies often sign this agreement with their directors and managers. This agreement gives the right to the directors to be saved in any damage, loss or liability.
The indemnification agreement includes the followings.
- The title of the agreement and the date
- The name of Indemnitee and indemnifier along with their addresses and the designations
- The reason or background for which he agreement is being made
- The terms and conditions on which indemnity will be valid
- Definitions of different business terms used in agreement for making it clearer.
- The terms and conditions in which Indemnitee will not be eligible for any indemnification
- Methods and procedures for indemnification must be well defined in the agreement
- The rights of the indemnifier in the process of the indemnification
- Duration of the agreement and other necessary terms and rules
- Signatures of the parties along with the legal witness.
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