indemnification trigger
Definition
An indemnification trigger is the specific event or condition that activates one party's legal obligation to cover another party's losses, legal costs, or damages. Think of it as the starting gun that sets off the duty to pay, and it only fires when a defined situation actually occurs. Common triggers include things like a breach of contract, a negligent act, or a third-party lawsuit arising from the business relationship.
Example
If your supplier contract says you must indemnify the supplier whenever a customer gets injured using your product, then a customer injury lawsuit is the indemnification trigger that puts you on the financial hook. Without that injury event occurring, your obligation to cover the supplier's costs simply never activates.
Watch Out
Read your contracts carefully to understand exactly what events can trigger your indemnification obligations, because a broadly written trigger clause could make you financially responsible for situations you never anticipated covering.
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.