{"id":189687,"date":"2024-08-08T15:33:47","date_gmt":"2024-08-08T14:33:47","guid":{"rendered":"https:\/\/legalvision.co.uk\/?p=189687"},"modified":"2024-08-08T15:33:49","modified_gmt":"2024-08-08T14:33:49","slug":"customer-unlimited-indemnity","status":"publish","type":"post","link":"https:\/\/legalvision.co.uk\/commercial-contracts\/customer-unlimited-indemnity\/","title":{"rendered":"Should I Agree to Give My Customer an Unlimited Indemnity?"},"content":{"rendered":"\n

As a supplier of services, your contracts must protect your business from risk. However, you will likely face customer contract negotiations during your business journey. When negotiating commercial contracts, a customer may ask you to agree to an unlimited indemnity obligation. Indemnities can be high risk, and your business needs to understand their meaning and implications. This article explores what an indemnity is, the risks you could face by giving an unlimited indemnity, and how taking legal advice can help protect your business when you face this customer request.<\/p>\n\n\n\n

What is an Indemnity, and When May a Customer Request One?<\/h2>\n\n\n\n

An indemnity is a contractual promise in which one party agrees to compensate another for specific losses or damages. This provision allocates risk and offers security, ensuring the indemnified party is not financially burdened by unforeseen losses that arise under the contract. Typically, an indemnity obligation kicks in upon a specific trigger event, such as when the supplier commits a breach of contract or the customer faces a third-party claim. <\/p>\n\n\n

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Supplier Contracts Checklist<\/div>\n
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Download this free Supplier Contracts Checklist to ensure your contracts will meet your business\u2019 needs.<\/p>\n <\/div>\n \n\nDownload Now<\/a> <\/section>\n <\/div>\n\n\n\n\n

Customers may request an indemnity clause<\/a> to protect themselves from risks associated with your products or services. Indemnities are a risk management tool that transfers potential dangers to you and minimises the customer’s exposure to unforeseen liabilities. <\/p>\n\n\n\n

Indemnities provide a customer business with several advantages. For instance, they may be able to offer customers compensation from the supplier<\/a> in specific circumstances without needing to prove fault, offering a more straightforward and quicker route for recovering losses compared to breach of contract claims.<\/p>\n\n\n\n

Examples<\/h2>\n\n\n\n

While indemnities are negotiation points and could cover a range of scenarios, here are some common examples of where a customer may request an indemnity: <\/p>\n\n\n\n