Indemnification Clause
A provision in the acquisition agreement that obligates one party to compensate the other for any losses or damages that arise after the deal closes.
Implications
A provision in a contract that requires one party to compensate the other for any losses, damages, or liabilities that arise from specific actions or events, often used to protect against legal risks and ensure accountability in business agreements.
Example
Example: A software vendor includes an indemnification clause in its contracts, requiring the client to cover any legal costs if the software is used in a way that infringes on third-party intellectual property rights.
Related Terms
Different from a warranty, which guarantees product quality or performance, an indemnification clause specifically addresses compensation for damages or losses arising from certain actions or conditions.
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