LegalFree tool
Indemnification Clause Drafter for Contracts
An indemnification clause written for your deal and your side, lined up with the liability cap, or a plain-English reading of the clause you have.
Free to start · Opens in your River workspace, ready to edit and share
How to write an indemnification clause
An indemnification clause is a promise by one party to pay for the other's losses from specific claims, usually lawsuits brought by third parties. A good one names the claims each side covers, based on the risks each controls. It says whether the promise includes defending the suit, sets out notice, control of the defense and settlement, and fits the contract's liability cap.
One principle does most of the work: each side covers the claims it is best placed to prevent. Stock wording like "any claim arising out of this agreement" ignores that and can promise far more than either side intends.
Decide who covers which claims
List the claims an outsider could bring because of this deal, then give each to the party that controls the risk.
Common Paper, which sells contract software, publishes a free cloud service agreement drafted by a committee of attorneys. By default, the provider covers claims that the service infringes someone else's intellectual property1. The customer covers claims that its content infringes, or that come from breaking the agreement's limits on use.
A common split in a software or services deal
| Claim from an outsider | Usually covered by | Because |
|---|---|---|
| Infringement by the product | The vendor | It built the product |
| Infringement by the customer's content | The customer | It chose what to upload |
| Misuse that breaks the contract's rules | The customer | It controls its users |
| A breach of the vendor's systems | The vendor, sometimes under a separate cap | It runs the security |
| Injury or damage during on-site work | The party whose people did the work | It supervised them |
Risks nobody controls, such as storms and shutdown orders, belong in a force majeure clause, which excuses performance rather than paying for a lawsuit.
Choose words that set the scope
Many clauses promise to "indemnify, defend and hold harmless." To indemnify is to pay covered losses. To defend is to take on and fund the other side's defense. Hold harmless overlaps with indemnify, and courts don't all read it alike, so don't count on it to add anything.
Take defend seriously. In Crawford v. Weather Shield2 (2008), a window supplier promised to defend a home builder against suits over its work. When homeowners sued, a jury found the supplier wasn't negligent. California's Supreme Court still upheld an award making it pay its share of the builder's defense costs. The duty to defend, it said, arises once a defense is requested, before anyone knows whether indemnity is owed.
Say whether the clause reaches disputes between the two of you. New York's highest court took this up in Hooper Associates v. AGS Computers3 (1989). It said an indemnity shouldn't be read to cover legal fees in a suit between the parties unless that intent is "unmistakably clear." A promise against "any and all claims," counsel fees included, wasn't enough.
Common Paper's terms settle the point: the provider covers only claims made by someone other than the customer, its affiliates or its users1. Put legal fees for disputes between you in a separate clause.
Watch the linking words too. "Arising out of" can reach any claim connected to the subject. "To the extent caused by" limits cover to the share of the loss the indemnifying party caused.
Before: Vendor shall indemnify, defend and hold harmless Customer from any and all claims arising out of or relating to this Agreement.
After: 9.1 Vendor will defend Customer against any third-party claim that the Service, as delivered, infringes that party's patent, copyright or trademark. Vendor will pay the resulting damages, approved settlements and reasonable attorney fees.
9.2 Section 9.1 excludes claims caused by Customer's changes, combinations with items Vendor did not supply, or use of an old version after a fix was offered.
- Outsiders only. Disputes between the two companies fall under the rest of the contract.
- One named risk. Infringement by the vendor's own product, which the vendor controls.
- Defined losses. Damages, approved settlements and reasonable fees, not "any and all" costs.
Check the law that applies
In the US, state law can narrow an indemnity or void it, so read the governing law clause before you draft.
In Texas, an indemnity for a party's own negligence must say so in specific terms and be conspicuous. In Dresser Industries v. Page Petroleum4 (1993), the Texas Supreme Court applied the same rules to releases and threw out two that excused a party's own negligence. Both sat on the back of a work order, in numbered paragraphs "without headings or contrasting type."
Construction contracts face statutes as well. New York voids any promise in a construction or repair contract to cover a party for injury or property damage its own negligence caused, even in part5. California has long voided such promises for a party's sole negligence or willful misconduct2, the Crawford court noted, and its rules for home building go further.
Make it easy to see
Capital headings and contrasting type count as conspicuous in Texas. Use them for any clause that makes one party pay for the other's own negligence.
Set the steps for handling a claim
Spell out what happens when a claim arrives. Common Paper's terms make prompt notice, reasonable help and sole control of the defense1 conditions of the indemnity.
Notice
The protected party reports each claim promptly, in writing. If that's you, ask that late notice cut cover only as far as it hurt the defense.
Control
The indemnifying party, which is paying, runs the defense. The protected party may join with its own lawyers at its own cost.
Settlement
No settlement may admit the protected party's fault or "materially and adversely" affect it without its written consent.
Cooperation
The protected party helps with documents and witnesses, at the indemnifying party's expense.
An infringement indemnity should also let the vendor fix the problem. Common Paper's terms let it get the customer the right to keep using the product, or replace or modify it. Failing both, it can end the order and refund unused prepaid fees.
Line it up with the cap and insurance
An indemnity pays only what the limitation of liability allows. Decide whether each one sits under the general cap, under a higher cap for named claims, or outside any cap. Write the same answer into both sections, and say whether the damages waiver applies to amounts paid on covered claims.
In Common Paper's 2026 benchmark of about 16,000 agreements signed on its terms, 96% of cloud agreements capped liability at 1x fees6. The share leaving some claims uncapped jumped to 10.2% from 1.1% a year earlier. Those claims tend to be extremes, such as gross negligence, willful misconduct and fraud.
Then check the money behind the promise. Liability policies commonly exclude liability taken on by contract, except for an "insured contract." The International Risk Management Institute, an insurance publisher, says that exception in most cases extends some coverage7 for liability assumed in an enforceable hold harmless provision. Definitions vary, so ask your broker. If you're the protected party, ask the other side for proof of coverage.
Check the indemnification clause before you sign
Reviewing the whole agreement, not just this clause? Start with a contract review.
Before you sign
- Each party covers named claims it can control
- Covered claims come from third parties unless stated otherwise
- Losses are defined, and any duty to defend is intended
- Notice, defense control, settlement consent and cooperation are written down
- The cap and damages waiver say how they treat the indemnity
- Any cover for a party's own negligence is conspicuous and allowed under the law that applies
- Insurance would respond to what you're promising
When to involve a lawyer
Ask a lawyer before you agree to an uncapped indemnity, a promise to defend, or cover for the other side's own negligence. The same goes for construction contracts and large deals. This guide is general information about US law, not legal advice.
When the other side marks up your draft, a redline comparison logs what changed in each round. The tool at the top of this page drafts the clause for your contract and your side.
How it works
Start with your contract, its current indemnity or a short description of the deal, and say which side you're on. River works out which outside claims each party controls and reads the liability cap. It checks the governing law for rules that can defeat an indemnity and tells you what it relied on. Then it writes the clause into your workspace in contract form, with a note on every choice.
Have a clause already? River can read it back to you instead. It explains who covers what, whether it reaches disputes between you and how it sits with the cap, then suggests the changes worth asking for. On a standard form like Common Paper's, it leaves the standard terms alone and puts changes on the cover page or in an amendment. It never promises a clause will hold up in court.
Share your contract
Paste the agreement or its indemnity, or describe the deal, and tell River which side you're on.
River maps the risk
It sorts which outside claims each party controls, then reads the liability cap and governing law.
Get your clause
A numbered indemnity in contract form with drafting notes, or a plain-English reading of your clause.
Prepare to negotiate
Edit it, or ask River for the other side's likely redline, a middle position or a matching cap.
What you get
- Covered claims listed for each side, kept to third-party claims unless you want them wider
- Indemnify, defend and hold harmless wording, with losses defined as judgments, approved settlements and fees
- Notice, defense control, settlement consent and cooperation terms that say who runs a claim
- For infringement, standard exclusions plus the vendor's options to license, modify, replace or refund
- In a pasted contract, matching edits to the liability cap and damages waiver, easy to spot
- Drafting notes on every choice, with the likely pushback and a fallback, in your River workspace
Common questions
What is an indemnification clause?
An indemnification clause is the part of a contract where one party agrees to pay for, and often defend, specific claims brought against the other, usually by outsiders. In a software deal, for example, the vendor typically covers claims that its product infringes a patent or copyright, and the customer covers claims about the content it supplies.
What's the difference between indemnify, defend and hold harmless?
Indemnify means paying covered losses. Defend means taking on and paying for the other side's defense once a covered claim is made and it asks for help. In California, that duty can apply even if you're later found not at fault. Hold harmless overlaps with indemnify, and courts don't all read it the same way, so spell out anything more you mean.
Should an indemnification clause be mutual?
Only where both sides take on real risks, and even then the risks are rarely the same. A vendor answers for infringement by its product and breaches of its own systems, while a customer answers for its content and its users. Mutual wording that hides that difference helps nobody, so list each side's covered claims separately.
Should an indemnity sit under the liability cap?
Not always, so decide claim by claim. Many software deals keep the indemnity under the general cap. In others, the customer negotiates it uncapped, or riskier claims such as data breaches get a separate, higher cap. Whatever you choose, write the same answer into the indemnity and the limitation of liability, or the two sections will contradict each other.
Does an indemnity cover lawsuits between the two parties?
Often not, unless the contract says so clearly. In commercial deals, indemnities are usually written for claims by outsiders. New York's highest court won't read one to cover legal fees in a suit between the parties unless that intent is unmistakable. If you want the loser of a dispute between you to pay fees, write a separate attorney fees clause.
How do I write an indemnification clause with River?
Paste your contract or its current indemnity into the box at the top of this page, or describe the deal, and say which side you're on. River works out which claims each party should cover and checks the cap and the governing law. It writes the clause into your free River workspace, with a note on each choice.
Is the indemnification clause drafter free?
Yes, it is free to start. Your indemnification clause opens in a River workspace, where you can edit it, share it or ask River to change it. Paid plans add more AI use and access to the most advanced models.
Sources
Common Paper. “Free Cloud Service Agreement Template for B2B SaaS.” commonpaper.com (opens in a new tab)
Caselaw Access Project. “Crawford v. Weather Shield Mfg., Inc.” case.law (opens in a new tab)
Caselaw Access Project. “Hooper Associates Ltd. v. AGS Computers, Inc.” case.law (opens in a new tab)
Caselaw Access Project. “Dresser Industries, Inc. v. Page Petroleum, Inc.” case.law (opens in a new tab)
New York State Senate. “Section 5-322.1: Agreements exempting owners and contractors from liability for negligence void and unenforceable; certain cases.” nysenate.gov (opens in a new tab)
Common Paper. “2026 SaaS Contract Benchmark Report.” commonpaper.com (opens in a new tab)
International Risk Management Institute. “insured contract.” irmi.com (opens in a new tab)
Built by
Chandler Supple
Co-founder & CEO, River
Chandler has spent the last six years working in AI, building tools for millions of users and Fortune 100 companies. In 2025, he co-founded River to build a new kind of operating system for AI agents.