Know What An Indemnity Agreement Means
In contract law, indemnity in general is a mutual agreement of one party to reimburse the other party’s loss incurred as a result of the indemnifier or some third party acting on behalf of the indemnifier. Usually, however, the indemnity to be paid is limited to an amount equivalent to that which would have been paid had the contract been established between the parties at the date of establishment. This amount is called the indemnity and it may be awarded to one party by mutual agreement between the two in order to satisfy the claims of the parties. However, the indemnity may also be granted voluntarily by the indemnified party or by another third party on behalf of the indemnified party to an independent person, corporation, or association acting on behalf of the indemnified party.
The general concept of indemnity in this context is a complete release from personal liability for all sorts of damages incurred by the one party in the course of the contract. Thus, if one party agrees to indemnity, then that party is relieved from all sorts of damages as a consequence of negligence on the part of the other party, whether negligence on the part of the business owner or of some other principal. Even if damages are awarded as a result of such negligence, then the indemnity will relieve the party from any further obligations to pay damages, even if the awards are made for exemplary damages only. Indemnity also means the right to recover damages even though the conduct complained of occurred without any negligence on the part of either the business owner or the employee.
The term “adequate indemnity” is used in different ways in different contexts and in different agreements. In some contracts, “adequate” means more than adequate, while in others, it signifies the same as more than just liability. Thus, when one party agrees to indemnity, it does not mean that the person or the entity will have more than his/her own responsibility to bear the costs and damages in cases where the other party is responsible. What one party agrees to do under indemnity in the context of a contract can be called “adequate indemnity” by another party if the agreement mentions the term “adequate”. This is not limited to any particular case, but rather refers to the situation where the other party will get more than its own share of expenses and damages if it is sued by the plaintiff.
It is a widely accepted principle that contracts cannot be enforceable against the parties unless both agree to their execution in terms. However, sometimes even if both parties to a contract have agreed on the content of the agreement, it may still be unenforceable if the terms of indemnification have been set out in a vague manner or have been executed in such a way that they are contrary to public policy. Such a practice could result in the invalidation of a contract. For example, if an employment contract says that an employee will be indemnified for all damages by an employer in case of dismissal, while the employee is not informed of the exact amount of such damages, then the contract may be declared invalid because of its vagueness.
It is also not unwise for an insurance company to enter into indemnity on behalf of its policyholders against the insured when the latter has been injured at the workplace. However, this must be done carefully and with due consideration of the complexities involved. The insurance company may have to pay all the costs which would arise from a suit by the injured person in order to win such a lawsuit. The indemnity in question must be sufficiently defined and limited to ensure that the interests of the indemnified person and the insurance company are balanced out. An employee may sue his employer for non-payment of benefits for the same injury even though the employee has not been given any advance notice of the lawsuit.
The question of whether one party agrees to indemnity on behalf of other parties comes up very often in personal injury cases. If one party agrees to indemnity on behalf of the other party, the court may award payment for medical and hospital bills and legal expenses incurred as a result of injuries suffered at work. However, the damage inflicted on the injured party must be proven before the court can award money or reimbursement to that person. In many cases, the injured party must prove that the injury was caused by the negligence of a third party and that the damage was foreseeable.
Another important term in an indemnity agreement is “hold harmless.” A hold harmless provision usually attaches to an insurance contract to ensure that the insurance company does not lose any money or face any legal penalties for negligence. For example, an insurance company may be held harmless for loss or damage resulting from the carelessness or negligence of a third party who was not an insured person. Such provisions protect the indemnity provider from losses that it could incur if it took the risk of allowing the insured person to drive a vehicle that violated traffic laws.
Indemnity clauses can be triggered by many events which can result in claims being submitted. For example, accidents, damages due to vandalism or malicious mischief, theft, death, birth defects, sexual harassment, negligence of a third party, defamation, fraud, breaches of contract, negligence and similar events are all possible causes of claim. As a general rule, the longer the contract is in effect, the more likely that your business can trigger events that may entitle you to compensation under the indemnity clause. However, if you need an insurance contract in Washington, it’s always a good idea to have one in place so that you know exactly what to expect.