A contract clause where one party agrees to cover the other's losses, legal costs, and damages arising from specified problems like IP infringement or negligence.
Indemnification is a promise to hold the other party financially harmless if a defined problem blows up. If you deliver a logo that turns out to infringe someone else’s trademark and the client gets sued, an indemnification clause decides who pays the lawyers and the damages.
For sellers, this is the clause most worth reading slowly. A broad, one-sided indemnity can make you responsible for far more than your fee — including problems you didn’t cause. Push for it to be mutual, tied to your actual fault (not “any claim whatsoever”), and paired with a liability cap so your exposure isn’t unlimited.
For buyers, a fair indemnity protects you from a contractor’s mistakes — using stock images without a license, copying code they didn’t own. But asking a solo freelancer to indemnify you against unlimited losses is often unrealistic and may not hold up.
The pairing that matters: indemnification defines who pays, and a liability cap defines how much. Sign one without the other at your peril, and run any high-stakes clause past an attorney first.