A contracting lawyer will first review the indemnification clause to see what losses are eligible under the clause, which in turn depends on how it is defined. 13.1 Both parties agree that after receiving notice of a claim or remedy arising from the activities to be undertaken in accordance with the project described in Annex A, the party receiving such notice will immediately inform the other party. Sponsor agrees to provide attorneys at its own expense to defend against any action brought or filed against the institution, system, its regents, senior officers, representatives, and/or staff with respect to the subject matter of the indemnification contained, whether such claims or claims are lawfully filed or filed, and subject to the texas Attorney General`s legal obligation, the institution agrees to cooperate with Sponsor in the defense of such claims or actions. Black`s Law Dictionary defines the exemption as follows: ”An obligation to make good the loss, damage or liability of another; the right of an injured party to demand from a person who has that obligation reimbursement for his or her loss, damage or liability; or reimbursement or compensation for loss, damage or liability resulting from an unlawful act; in particular, the right of a party that is secondarily liable to recover from the party that is primarily responsible for reimbursement of costs paid to a third party for injuries resulting from a breach of a customary obligation. Black`s Law Dictionary, seventh edition. In the past, compensation only covered the rights of third parties. However, in recent years, and particularly in the United States, the scope of application has been extended to claims between the parties. IP Draughts suggests that the use of party indemnities in the United States was motivated by the belief that ”if a successful party is to recover its legal costs in a contractual dispute, compensation is necessary. This is because U.S. courts generally do not impose their legal fees on a winning party. English law in this area is very different; Typically, the winning party receives some or all of their legal fees. Inappropriate Use of Indemnifications, IP Draughts, 29 June 2011.
Contracts often contain a provision called a indemnification clause. This clause states that, in certain circumstances, one of the parties (”indemnification party”) promises to defend and pay the costs and expenses for the other party (”indemnification party”). One of the reasons for the inclusion of such a clause is the belief of the indemnified party that the contract expresses it at a certain risk of loss or cost by a claim that could be invoked by a third party. . . .