Vendor wants us to indemnify them, but offers no reciprocal protection — is that…

Indemnifying a vendor without receiving reciprocal protection creates a one-way risk profile that can expose your business to significant liabilities. Here are the key risks and tradeoffs:

• Unbalanced Risk: You assume all responsibility for claims related to the vendor's deliverables, which can lead to unexpected costs and legal exposure.
• No Liability Cap: Without a cap, your financial exposure could be unlimited, making it difficult to predict potential liabilities.
• Lack of Protection: If the vendor does not indemnify you, you have no recourse if their deliverables cause issues, such as IP infringement or data breaches.

To negotiate a more balanced agreement, consider the following strategies:

• Request Reciprocal Indemnity: Insist that the vendor also indemnifies you for claims arising from their deliverables, especially regarding IP and data protection.
• Propose Liability Caps: Advocate for a cap on indemnity obligations to limit your financial exposure and make the terms more manageable (but recognize here that they may request the same cap on their own indemnification, should it exist)
• Highlight Market Norms: Use examples from similar agreements to illustrate that mutual indemnity is a common practice, which can strengthen your position.

By addressing these points, you can work towards a more equitable agreement that protects both parties.

Not legal advice.

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Reviewing an indemnity provision?

Indemnity risk usually turns on scope, triggers, and carve-outs. For a quick commercial-risk read, run the clause through the Clarioso Indemnity Analyzer.

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