Clauses in Contracts: “Boring” Boilerplate That Can Have a BIG Impact

 

and owners. My job, generally speaking, is to make sure my client’s interests are addressed and risks are mitigated. One of the tasks I usually undertake to complete this job is to add paragraphs of legal verbiage that few people read and even fewer understand. Among this legal boilerplate 


This is a complicated provision that can prove to be quite useful if an agreement or project goes sideways. It usually involves agreeing to “defend, indemnify, and hold harmless” other people or entities.

 out before signing exactly what you are agreeing to do when you agree to “defend, indemnify, and hold harmless.” This article is intended to help make sense of that commitment.


  third party claims related to the contract. A bare-bones 

Each party agrees to indemnify, defend, and hold harmless the other party from and against any loss, cost, or damage of any kind (including reasonable attorneys’ fees) to the extent arising out of its breach of this agreement, and/or its negligence or willful misconduct.”

By agreeing to “defend” another party, you are agreeing to pay for the attorney fees and costs and other expenses if someone takes legal action against that other party. By

24 Community Associations Journal | November/December 2019

agreeing to “indemnify and hold harmless” another party, you are agreeing to accept responsibility and risk for damage or loss that the other party might suffer or be responsible for otherwise, and also to protect the other party against having to suffer damage or a loss. (The “indemnify” and “hold harmless” language is functionally redundant.)

For example, if a unit owner sues an association’s community manager, and there is language in the management agreement indemnifying the manager, the association could be on the hook for both the attorneys’ fees incurred by the manager and any damages award received by the owner.


An important thing to note with respect to these types of provisions is who exactly you are agreeing to protect. These clauses typically protect multiple parties—with respect to an association, for example, not just the association is usually covered.

The provision also usually covers the individual directors, 

s a community association lawyer, I often receive requests from association clients or managers asking me to draft or review a vendor contract. As a dispute-resolution attorney, I also frequently draft settlement agreements between and among associations, vendors

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