indemnification
Definition
Indemnification is a promise in a contract where one party agrees to cover the other party's losses, legal fees, or damages if something goes wrong. Think of it as a financial backstop where someone else agrees to foot the bill if a specific problem lands you in trouble.
Example
If you hire a contractor to work in your store and they accidentally injure a customer, an indemnification clause in your contract could require the contractor to pay for the lawsuit instead of you.
Watch Out
These clauses can be written very broadly, so always read them carefully because you might be agreeing to pay for problems that were not even your fault.
See which terms appear in your contract?
This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.