Supplier Indemnification Clause Overview

Summary

The supplier indemnification clause requires the supplier to defend, indemnify, and hold harmless the company and its affiliates against liabilities arising from the suppliers gross negligence, willful misconduct, or material breach of the agreement. The supplier controls the defense but needs the companys approval for settlements. Obligations are not limited by insurance coverage and continue after the agreement ends. The scope can be made more specific to cover only direct liabilities. Survival means obligations persist post-agreement, and not limited by insurance means liabilities may exceed insurance coverage. Sanctions are penalties for non-compliance, and de minimis effect refers to impacts too minor for legal action.

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brief of what this means for the supplier is it fair

Sure, let's break down the indemnification clause and assess its fairness:

Key Points of the Clause:
- **Indemnification Obligation**: Supplier must defend, indemnify, and hold harmless the Company and its affiliates against all liabilities and claims.
- **Scope**: Includes costs, expenses, damages, losses, fines, etc.
- **Circumstances**:
- Supplier’s willful or negligent acts or omissions.
- Breach of the Agreement.
- **Control of Defense**: Supplier has the authority to direct the defense or settle claims but needs Company’s consent for settlements.
- **Survival**: Obligations survive the expiration or termination of the Agreement.

Fairness Evaluation:
- **Comprehensive Protection**: Protects the Company and its affiliates extensively, which is standard in many agreements.
- **Supplier’s Control**: Allows Supplier to direct the defense, which is fair, but with Company’s right to monitor and consent to settlements.
- **No Insurance Limitation**: Supplier’s indemnity obligations are not limited by their insurance, which can be burdensome.

Conclusion:
The clause is comprehensive and fairly standard but may impose significant responsibilities on the Supplier. It’s advisable for the Supplier to review this clause with legal counsel to

how can i reword it to protect supplier

Certainly! Here's a reworded version to provide more balanced protection for the supplier:
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Revised Indemnification Clause:
***.*** Supplier agrees to defend, indemnify, and hold harmless Company and its shareholders, members, partners, affiliates, employees, representatives, and agents (collectively, the "Company Indemnitees") from and against all liability arising from any claims, suits, actions, costs (including reasonable attorneys' fees and costs of investigation), expenses, damages, and losses (individually, a "Claim" and collectively, "Claims") arising from Supplier's (A) gross negligence or willful misconduct, or those of Supplier's officers, employees, representatives, agents, affiliates, or subcontractors, or (B) material breach of the Agreement. Supplier shall have the authority to direct the defense or settle any Claim indemnified by Supplier; provided that Company may monitor such matters through counsel of its choice and at its own cost; and provided further that Supplier may not settle any indemnified Claim unless such settlement includes a release of Company and is approved by Company, which approval shall not be unreasonably withheld. The indemnification obligations hereunder are not limited by insurance coverage and shall survive the expiration or termination of the Agreement.
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outline important parts of the clause

Certainly! Here are the important parts of the revised indemnification clause:
- **Indemnification Obligation**:
- Supplier agrees to defend, indemnify, and hold harmless Company and its affiliates.
- **Scope**:
- Liability arising from claims, suits, actions, costs, expenses, damages, and losses.
- **Circumstances**:
- Supplier’s gross negligence or willful misconduct.
- Material breach of the Agreement.
- **Control of Defense**:
- Supplier directs the defense or settles claims but needs Company’s approval for settlements.
- Company may monitor through its own counsel at its own cost.
- **Survival**:
- Obligations are not limited by insurance coverage and survive the expiration or termination of the Agreement.
Would you like further clarification on any particular point?

what does survival mean

"Survival" in a legal context means that certain obligations or rights continue to exist even after the contract has expired or been terminated.
In the indemnification clause you provided, it means the supplier's responsibility to indemnify the company remains in effect even after the agreement ends.
Do you have any other questions regarding this clause?

most liable aspects for the supplier

To understand the most liable aspects for the supplier in the provided indemnification clause, here are the key points:
- **Indemnification Obligation**: Supplier must defend, indemnify, and hold harmless the Company and its affiliates.
- **Scope**: Covers all liabilities, including claims, costs, expenses, damages, and losses.
- **Circumstances**:
- Supplier’s gross negligence or willful misconduct.
- Material breach of the Agreement.
- **Control of Defense**: Supplier directs the defense or settles claims, requiring Company’s approval for settlements.
- **Survival**: Obligations are not limited by insurance coverage and continue after the agreement ends.
Would you like to know the implications of any specific part of this clause for the supplier?

can the scope be more specific

Certainly! To make the scope more specific for the supplier, we can narrow down the liabilities covered. Here’s a more specific version:
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Revised Indemnification Clause:
- **Indemnification Obligation**: Supplier agrees to defend, indemnify, and hold harmless Company and its affiliates.
- **Scope**: Liability arising from:
- Claims, suits, actions, costs, and expenses directly caused by Supplier’s gross negligence or willful misconduct.
- Material breach of the Agreement.
- **Exclusions**: Does not cover indirect, incidental, or consequential damages unless caused by gross negligence or willful misconduct.
- **Control of Defense**: Supplier directs the defense or settles claims but needs Company’s approval for settlements. Company may monitor through its own counsel at its own cost.
- **Survival**: Obligations are not limited by insurance coverage and continue after the agreement ends.
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Would you like further details on any specific part of this clause?

what does it mean that indemnification obligations hereunder are not limited by insurance coverage;

It means the supplier's duty to indemnify the company is not capped by the limits of their insurance policy. The supplier must cover any liabilities, even if they exceed the insurance coverage.
Would you like more details on how this might affect the supplier financially?

what are sanctions

In a legal context, sanctions are penalties or other forms of enforcement used to encourage compliance with the law or court orders. They can include:
- **Fines**: Monetary penalties.
- **Imprisonment**: For severe or criminal non-compliance.
- **Restrictions**: Limitations on certain rights or activities.
- **Contempt of Court**: Penalties for disobeying court orders.
What specific issue or situation are you dealing with that involves sanctions?

a de minimis effect

In legal terms, "de minimis" refers to something too minor or trivial to warrant consideration. A "de minimis effect" implies that the effect or impact is so small that it does not merit legal action or enforcement.
Are you dealing with a specific situation where you think the impact might be de minimis?

Supplier Indemnification Clause Overview

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