What it is
An indemnification clause says one party will reimburse the other for losses, claims, or legal fees caused by certain events. In freelance and contractor agreements, the client often demands you indemnify them — meaning you cover their legal bills if anything goes wrong.
Why it matters
A one-sided indemnity can make you personally liable for far more than the contract is worth. Without a cap, a six-figure lawsuit can land in your lap from a $5,000 project. Mutual indemnity and a damages cap are essential protections.
Sample clause language
"Contractor shall indemnify, defend, and hold harmless Client from any and all claims, damages, losses, and expenses, including attorneys' fees, arising from or related to the Services, regardless of cause."
What it really means: 'Regardless of cause' means you pay even if the client caused the problem. There's no cap, no mutual obligation, and the trigger ('arising from or related to') is impossibly broad.
Red flags
- One-sided (only you indemnify the client)
- No cap on liability
- Triggers on 'any claim,' even unrelated ones
- Includes the client's own negligence
- Includes consequential or punitive damages
Fair / acceptable
- Mutual indemnity
- Liability capped at fees paid
- Triggers limited to your gross negligence or IP infringement
- Excludes the other party's negligence
- Excludes consequential damages
How to negotiate
- Insist on mutual indemnification
- Cap your liability at total fees paid (or 1–2x)
- Limit triggers to your willful misconduct or IP infringement
- Exclude consequential damages explicitly
Frequently asked questions
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Not legal advice. For informational purposes only.