Ironically, failure to properly define the word “indemnify” is the root of significant number of lawsuits because the definition varies from state to state. In a majority of states, the duty to indemnify does not automatically include the duty to defend the indemnitee.
A number of states, including California, define indemnification to cover both legal expenses and losses incurred by the indemnitee. California’s definition is set forth in its civil code. In other states, the common law provides this definition.
Regardless of which state’s law applies, counsel for indemnitees should add language to clearly state the indemnitor is responsible for paying the costs of defense. When foreseeable costs of defense are more than $100,000, the addition of this clause avoids an expensive mistake.
David Seidman is the principal and founder of Seidman Law Group, LLC. He serves as outside general counsel for companies, which requires him to consider a diverse range of corporate, dispute resolution and avoidance, contract drafting and negotiation, real estate, and other issues. He can be reached at david@seidmanlawgroup.com or 312-399-7390.
This blog post is not legal advice. Please consult an experienced attorney to assist with your legal issues.
