iLegal -Live from adtech San Francisco – Indemnity Clauses
In my day to day capacity as a General Counsel in the affiliate industry, I have the opportunity to review dozens upon dozens of contracts. “Agreements,” “insertion orders,” “Contracts,” “terms and conditions;” they go by many names, but across the board they contain many of the same, “standard” terms. Unfortunately, some of what is presented as “standard” is not necessarily so in legal terms.
My first piece of advice about your written agreements is to make sure you read them thoroughly. If you hate reading the seemingly confusing language of lawyers, you’re not alone. But your responsibilities are contained within that language, as are your rights in the contract. So slog your way through it, ask the questions no matter how stupid you think they might sound, and don’t sign the thing until you understand what you’re signing.
Sometimes non-lawyers reviewing contracts don’t feel comfortable negotiating about what seems like standard language in a contract. But I’d like to give you an example of what might seem like a “standard” clause, which I’d suggest you try to negotiate.
Virtually every contract contains an “indemnity” clause. This is a provision where one party agrees to cover the legal expenses (the lawsuit defense costs) of the other should litigation arise out of any range of matters covered by the contract. In general, this isn’t a problem, and can help reduce a company’s potential liability when entering into an agreement. The problem arises when that clause only plays one way, and it’s against you.
I’ve seen many contracts in this industry where the other party wants you to agree to indemnify them, but they aren’t extending the same protection for you. In plain English; if they get sued and can blame you, you will pay their legal costs and any judgment against them. If you get sued because of something they do, they’re not making the same promise in return.
You can’t blame someone for asking, right? But if you’re smart enough to really read the contract, you’ll be smart enough to ask that the other party make the indemnity clause mutual. It’s actually fair to ask it to run both ways, and many companies will agree to do so if you ask.
It’s a simple thing, but make sure you read your contracts. And make sure you come back to read this column. Over the next several months, I’ll be periodically writing columns that deal with specific contractual issues like “indemnity” clauses. If there’s a specific type of contract clause that you have questions about, drop me an email and we’ll see if enough people are facing similar questions that it makes sense to do a column on the subject.
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Come back to the iLegal column every week as we get specific about the rules, regulations, laws and trends that affect the online advertising industry. Each week we discuss important legal issues, talk about how to avoid the pitfalls, and cover the breaking legal and regulatory advertising industry news.
Legal Disclaimer: Information conveyed in this column is provided for informational purposes only and does not constitute legal advice. These materials do not necessarily reflect the opinions of Digital Moses, and is not guaranteed to be complete, correct, or up-to-date. The column is provided for "information purposes" only and should not be relied upon as "legal advice." This information is not intended to substitute for obtaining legal advice from an attorney. No person should act or rely on any information in this column without seeking the advice of an attorney.
Mark Meckler is the General Counsel for UniqueLeads.com, Inc., and Unique Lists, Inc.
Copyright 2007 Mark J. Meckler
