Why Indemnity Clauses Create the Most Negotiation
Drama
In almost every commercial contract, whether it is a services
agreement, a supply contract, a technology deal, a private equity
agreement, a share purchase agreement, a distribution arrangement,
or even a simple vendor engagement, there is one clause that almost
always sparks the most debate.
That clause is the indemnity clause.
Commercial teams often believe the "real negotiation"
is about pricing, payment schedules, deliverables, service levels,
or termination rights. But anyone who has worked on contracts for
long enough knows that the real negotiations usually begin once the
discussion reaches indemnity.
Because indemnity answers one question very clearly: If
something goes wrong, who will pay?
