Sept/Oct 19 - ChannelVision Magazine

Rethinking Indemnification By Phil Josephson I ndemnification is a contractual obligation used to shift risk from one legally responsible party to anoth- er party. In essence, an Indemnifying party promises an insurance policy to the Indemnified party for losses, damages or liabilities that may be incurred in certain circumstances. This is why parties should not consider an Indemnification clause as merely a clause for “the legal department” to review and approve. Rather, In- demnification clauses are a financial matter, and there is a potential cost (risk allocation amount) to each word contained in an Indemnification clause. The use of Indemnification clauses in agreements has its pros and cons. The use of Indemnification clauses may be essential or useful to close a deal as the “ Indemnify - To save harmless; to secure against loss or damage; to give security for the reimbursement of a person in case of an anticipated loss falling upon [the person]. Also to make good; to compensate; to make reimbursement to one of a loss already incurred by [the person].” – Black’s Law Dictionary “Literature is the effort of man to indemnify himself for the wrongs of his condition.” – Ralph Waldo Emerson channel management A financial matter disguised in legalese 28 Channel Vision | September - October, 2019