Indemnity Clause Definition

• An indemnity clause is a provision found in most business contract agreements. An indemnity clause holds one party responsible for physical or monetary damages suffered by the other party while in the course of executing the contract. For example, if a contractor leaves tools laying around the job site and third-party trips and sustains an injury, the owner of the business can force the contractor to reimburse him for any legal costs and settlement amounts resulting from the injured third-party suing the business owner.