“You Forgot the Indemnity Clause”: The Hidden Contract Provision That Could Save — or Sink — Your Business

By Jesse David Eisenberg, Esq. | JDE Law Firm, PLLC

Most business owners skip right over it. The clause near the end of the contract. Legalese. Buried in boilerplate. But when the lawsuit hits — it’s the first clause everyone looks for.

That clause is the indemnity provision.

What Is an Indemnity Clause?

It’s a promise: “If something goes wrong and you get sued because of me — I’ll cover your loss.”

Indemnity clauses shift legal risk from one party to another. If drafted well, they’re a shield. If drafted poorly, they’re a loaded gun pointed at your business.

Why Most Businesses Overlook It

In deals under pressure — or when using off-the-shelf templates — this clause often goes unnoticed:

• 📉 It’s buried deep in the agreement
• 🧾 The language is dense and hard to follow
• 💼 It feels hypothetical — until it’s not

But if the other side causes a problem that leads to a lawsuit, and you get dragged in — this clause can determine whether you’re reimbursed, or left to pay the entire bill.

Real Scenarios Where It Matters

• 🚨 A subcontractor’s employee sues the general contractor for injury
• 📱 A tech vendor causes a data breach — your clients sue you
• 🔍 A consultant uses copyrighted material — and you’re named in the claim

If there’s no indemnity clause — or if it’s too narrow — you eat the loss.

One Clause, Thousands at Stake

A strong indemnity clause should:

• 🔒 Cover third-party claims arising from the other party’s negligence or breach
• ⚖️ Clearly state whether attorneys’ fees and defense costs are included
• 📌 Define whether the indemnity is limited or unlimited in scope

Without it, you may win your case but still go bankrupt paying the defense costs.

What Business Owners Should Do Now

Indemnity clauses are not “set it and forget it.” Every deal — every contract — needs its own.

✔️ Review current vendor and contractor agreements
✔️ Get tailored language that matches your real-world risk
✔️ Don’t sign another deal without reviewing this clause first

Don’t Let One Clause Destroy Your Business

📞 If you’ve signed contracts without an indemnity clause — or need help negotiating one that actually protects you — call now:
www.jdelaw.nyc | NY: 718-966-0877 | NJ: 732-490-7120

My business is to protect your business.