Vrijwaring

Indemnification is a commonly used provision in agreements whereby one party (the indemnifying party) undertakes to protect the other party against liability or damage. This may relate to third-party claims, such as infringement of intellectual property rights, product liability or tax claims. The indemnification determines which party ultimately bears the financial burden.

In Dutch legal practice, indemnification is relevant for clearly allocating risks between the contracting parties. Without a well-drafted indemnification clause, a party may unexpectedly be confronted with substantial costs or proceedings. The scope of the indemnification is often limited to direct damages and excludes indirect or consequential damages.

In practice, indemnification is frequently applied in purchase agreements, mergers and acquisitions, licence agreements and IT contracts. Lawyers draft the clause with care to clearly define its scope, duration and any exclusions.