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Indemnify the Other Party?

LOS ANGELES—By adding an indemnity on top of standard contract remedies, parties invite the litigator for the indemnified party to indulge creativity in imagining all kinds of remote misfortunes arising from the breach, well beyond even consequential damages, says one source in this EXCLUSIVE column on the subject.

By Natalie Dolce | Updated on February 24, 2015

LOS ANGELES—“Many real estate agreements—particularly loan documents—contain language whereby one party agrees to ‘indemnify’ the other party.  These provisions are increasingly sprinkled throughout agreements without, I believe, enough consideration of their effect.” That is according to Tom Muller, co-chair of land use and real estate practice at Manatt, Phelps & Phillips LLP.

According to Muller, who wrote in the exclusive commentary on the subject below, a typical provision might state that “Borrower hereby agrees to indemnify and hold harmless Lender from and against all losses, costs, claims, liabilities, fines, penalties and expenses, including reasonably attorneys’ and experts’ fees and expenses, in any way arising out of or related to the Loan.”

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