The client wants you to indemnify them: what to push back on
What "indemnify, defend and hold harmless" commits you to, which claims to accept, narrow or refuse, and mutual wording you can send back.
Push back on four things: claims you didn't cause, claims the client itself brings against you, the client's own negligence, and an indemnity with no limit. Offer instead to cover outsiders' claims to the extent your work caused them, with a fair defense procedure and a cap. Ask the client to cover claims caused by its own materials and changes in return.
What does "indemnify, defend and hold harmless" commit you to?
An indemnity is a promise to cover someone else's losses from certain claims, which can include their legal bills. It's one of the clauses that cost the smaller party money. Reading their contract from your side lists broad wording to search for; this guide takes one clause apart.
A broad client indemnity, made up for this guide:
Contractor shall indemnify, defend and hold harmless Client and its affiliates from and against any and all claims, losses, damages, fines and expenses, including attorneys' fees, arising out of or relating to the Services or this Agreement.
| Phrase | What it adds | Ask for instead |
|---|---|---|
| "indemnify" and "hold harmless" | You repay losses from a covered claim: in Common Paper's form, "damages, awards, settlements, costs, and expenses" (§9.1). Both forms pair the two words | Damages and costs awarded, or agreed in a settlement you approve (Bonterms §13.1) |
| "defend" | You run and pay for their defense, possibly before anyone shows you did wrong: in Bonterms, a claim "alleging" infringement, or a "threatened claim," is enough (§2.1, §13.3) | Defense only with control of it and of any settlement |
| "any and all claims, losses, damages, fines … including attorneys' fees" | Attempts to cover every kind of claim, loss and fine, plus their legal bills | A named list of claims, no fines, and "reasonable" attorneys' fees, as both forms say |
| "arising out of or relating to," with no third-party limit | Could be read to cover claims you didn't cause, and claims the client brings itself | Outsiders' claims only, "to the extent caused by" your breach, negligence or willful misconduct |
| No procedure | Uncertainty over who picks the lawyers, who can settle, and which costs you owe | Notice, your control of the defense, their cooperation, no settlement admitting your fault without consent |
"To the extent" matters when both sides share the blame: it's meant to limit you to your share.
What do the standard forms cover?
Two free published standard contracts, Common Paper's Professional Services Agreement (PSA) 1.1 and Bonterms' PSA 1.2, are balanced on who covers what. Both cover only outsiders' claims, from a short list, both ways. Bonterms, though, leaves indemnities uncapped by default (§12.5).
| Point | Common Paper PSA 1.1 | Bonterms PSA 1.2 |
|---|---|---|
| What you cover | Deliverables, used as agreed, infringing others' IP (client materials and client-procured third-party materials excluded); your staff deemed the client's employees "because of Provider's actions or omissions"; your "gross negligence, fraud, or willful misconduct" (cover page default) | Services or deliverables infringing a third party's IP; your breach of the rules on the client's materials, systems and facilities (§13.3). Neither applies to the extent a claim results from client materials, client changes or combinations (§13.6) |
| What the client covers | Its materials, and third-party materials it procured, infringing others' IP when you use them as agreed; its gross negligence, fraud or willful misconduct | Its materials infringing a third party's IP when you use them as authorized |
| Procedure | Prompt notice, reasonable assistance at the indemnifying party's expense, its sole control of defense and settlement; no settlement admitting fault without consent (§9.3) | Similar; late notice cuts the duty only to the extent the delay prejudiced it (§13.4) |
| If deliverables infringe | Not addressed in §9 | Get rights, or replace or modify; only as a last resort, if neither is commercially feasible, end the SOW and refund its fees and expenses (§13.5) |
Neither default list names ordinary negligence. Bonterms' list does reach breaches of its rules on client materials, systems and premises (§8). Its rule on injury or property damage from your negligence (§12.5) lifts the cap but adds no indemnity cover.
Read the indemnity with the cap section: outside the cap, it has no ceiling unless the clause sets one.
Which claims should you accept, narrow or refuse?
Sort each claim in the client's indemnity into accept, narrow or refuse.
| Their ask | Do | Offer instead |
|---|---|---|
| Your deliverables infringe someone's IP | Accept, narrowed | Deliverables as delivered and used as agreed; not client materials, client changes or combinations |
| Your staff are treated as the client's employees | Accept | Only "because of" your own actions or omissions |
| Your negligence | Narrow, or leave out | Only injury or property damage to outsiders that you caused, if your work could physically harm anyone |
| Your breach of confidentiality or data rules | Narrow | If they insist: outsiders' claims, to the extent your breach caused them |
| Anything "arising out of or relating to" your work | Refuse as written | The named claims in this table |
| Any breach of the contract | Refuse | The contract's normal remedies and cap |
| Claims the client brings against you | Refuse | Outsiders' claims only |
| The client's own negligence | Refuse | Each side covers what its own conduct causes |
| Regulatory fines and penalties | Refuse | Exclude fines unless counsel confirms that the specific liability may legally be indemnified |
Make the indemnity mutual. In both forms, the client covers outsiders' claims that its materials, used as agreed, infringe their IP. Covering its changes and instructions too is your proposal, not the forms'.
If the client says "every vendor signs this," reply: "We're proposing a defined list of third-party claims, exclusions for risks you control, an agreed defense procedure and a cap."
What wording can you send?
Adapt this mutual indemnity before pasting it. "Provider" is you; match "Deliverable" and "Client Materials" to your agreement's defined terms.
“Indemnification. (a) By Provider. Provider will defend Client against any claim by a third party (not Client or its affiliates) to the extent it alleges that a Deliverable, as delivered and used as this Agreement allows, infringes that party's [copyright, trademark or trade secret][, or that Provider's negligence or willful misconduct caused bodily injury or damage to tangible property — include only if the work could physically harm someone]. Provider will pay the damages and costs, including reasonable attorneys' fees, finally awarded on that claim or agreed in a settlement Provider approves. (b) Exclusions. The infringement part of (a) does not apply to the extent a claim results from Client Materials, Client's changes to a Deliverable, or use of a Deliverable with items Provider did not supply. Neither party has to defend or pay for a claim under (a) or (c) to the extent the protected party's own negligence or willful misconduct caused it. (c) By Client. Client will defend Provider against any claim by a third party (not Provider or its affiliates) to the extent it alleges that Client Materials, used as this Agreement allows, infringe that party's [same rights as in (a)][, or that Client's negligence or willful misconduct caused bodily injury or damage to tangible property — include only if the work could physically harm someone], or results from Client's changes to a Deliverable[ or Client's instructions]. Client will pay damages and costs on the same basis as (a). (d) Procedure. The protected party will promptly notify the other in writing, give it sole control of the defense and settlement, and cooperate at the other's expense. No settlement may admit fault for, or impose obligations on, the protected party without its written consent. (e) Limit. Each party's total liability under this Section is limited to [agreed indemnity cap], except liability that applicable law does not allow to be limited. This Section is each party's exclusive remedy for the claims it covers.”
Before you send it:
- Make the cap section match (e).
- "Exclusive remedy" makes this section both sides' only route for these claims; delete it to keep other remedies open.
- Neither form requires the bracketed injury wording; drop it unless your work could hurt someone. Ask a lawyer about adding patents.
“Subject: [Project name] agreement: the indemnity in Section [X] Hi [Name], Thanks for the agreement. We're happy with most of it, except the indemnity in Section [X]. As written, it could be read to cover any claim "arising out of or relating to" our services[, including claims your side brings or partly caused]. We've proposed a mutual version: each of us covers outsiders' claims our own work caused, with the usual defense steps and a cap of [an amount you could pay or insure]. Our tracked wording is attached. Best, [Your name]”
When can you accept their indemnity as written?
Accept the client's indemnity only if you could pay what it exposes you to and no lawyer trigger applies.
| If | Then |
|---|---|
| Only outsiders' claims you cause, with notice, control of the defense and a cap you could pay | Accept |
| It's one-way but otherwise narrow | Ask once for the client's side; accept if the work is worth it |
| It's broad, and the client won't move | Don't sign on price alone: see a lawyer, then price the risk or decline |
What should you check before you reply?
- Whose claims. Outsiders' only, not the client's or its affiliates'.
- What causes them. "To the extent" you caused them, not "arising out of or relating to" the work.
- The client's side. It covers IP claims about its materials, used as agreed, claims from its changes, and injury claims if you keep that limb. Each side's own fault is excluded from the other's cover.
- The procedure. Notice, control of the defense, cooperation and settlement consent are written in.
- The ceiling. You know whether the cap covers it, and you've asked your broker whether your policy covers contractual liability.
When should you get a lawyer?
Get a lawyer first if:
- The indemnity covers the client's own negligence, or claims the client brings itself.
- It has no cap, or one claim could cost more than your business could pay.
- You'll handle personal, health or payment data, or it covers regulatory fines.
- Your work is part of a construction project, or the contract uses a law you don't know.
New York voids some clauses in contracts for the "construction, alteration, repair or maintenance of a building, structure, appurtenances and appliances," including related moving, demolition and excavating. It voids those making you cover the other party for bodily injury or property damage caused by its own negligence, "whether such negligence be in whole or in part" (General Obligations Law §5-322.1). Ask a lawyer what applies to your work.
When does checking an indemnity by hand stop working?
Checking an indemnity by hand works when it sits in one clause of a short contract. It slips when the duty spreads across an MSA, an SOW and a data addendum, or a definition elsewhere widens it. It also slips when the cap section exempts indemnities in a line you missed, or several contracts land at once. That's when it's worth having a tool read their contract from your side and show you what's risky.
DealMate is an AI contract assistant that takes a deal from first draft to final: describe the deal in a sentence and get a draft built from your templates and clauses; when they send their template, review it from your side and see what's risky; when their redlines come back, compare the versions and see every change and the risk it carries.
Sources
- Professional Services Agreement Standard Terms, Version 1.1 — Common Paper
- Professional Services Agreement: Cover Page and annotations (Standard Terms v1.1) — Common Paper
- Professional Services Agreement, Version 1.2 — Bonterms
- General Obligations Law §5-322.1 — New York State Senate
This is general information, not legal advice. For high-stakes or unusual terms, talk to a lawyer.
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