You’re reviewing a contract, and there it is: a long paragraph packed with legal language about who’s responsible if something goes wrong. You’re not exactly sure what it means, but it sounds serious. That’s the indemnification clause, and if you sign without understanding it, you could be agreeing to much more than you think.

Indemnification clauses can shift financial responsibility for lawsuits, damages, or other claims. Sometimes, they make sense. Other times, they are overly broad and create huge risk. The key is to know what to look for and not to assume you have to accept what’s written just because it’s in the contract.

You Don’t Have to Sign As-Is

Just because a contract includes an indemnification clause doesn’t mean it’s non-negotiable. If a clause appears one-sided, request clarification or suggest revisions. Many companies, especially large ones, include blanket indemnity clauses that attempt to shift all the risk to the smaller party. These clauses often make you responsible for damages that go far beyond your control.

In New York, overly broad or vague indemnification clauses may not be enforceable. But many are enforceable, and courts will apply them as written if they’re clear. That’s why it’s essential to ensure the clause is narrowly tailored to the actual work or services provided. If you’re a subcontractor on a construction project, for example, you shouldn’t be indemnifying the general contractor for issues that have nothing to do with your scope of work.

Make It Mutual—or at Least Fair

Try to make indemnification provisions reciprocal. If the other side wants protection, you should also consider whether you need protection. That might not always make sense. Sometimes, one party does the work, and the other pays. However, where there is shared risk, there should be shared responsibility.

If you can’t get reciprocal indemnification, you may be able to negotiate other protections like warranties or limitations on what you’re indemnifying them for. For instance, you could exclude indemnification for fraud or breach of contract committed by the other party. It’s surprising how often these clauses are written so broadly that one party could be forced to pay for the misconduct of another. 

Make Sure You Understand Before You Sign

Indemnification clauses are not just boilerplate; they matter. They determine who pays when things go sideways. Before you sign, ask questions, seek clarity, and push back where necessary. Even if you’re working with a larger company or in an industry with standard contracts, you don’t have to accept terms that put you at unnecessary risk.

Rodriguez-McCloskey PLLC helps businesses make sense of the agreements they’re signing—and avoid liabilities they didn’t see coming. If you’re unsure about a contract provision or want to be confident in what you’re agreeing to, we’re here to help. Contact us today.