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Frequently Asked Questions

What is the difference between indemnity and hold harmless clauses in the context of negligence?

In the context of negligence, indemnity and hold harmless clauses are often misunderstood as interchangeable, but they have distinct differences. Indemnity clauses are designed to protect one party from financial loss. In a negligence scenario, if a party is found negligent and causes harm to another party, an indemnity clause would require the negligent party to compensate the injured party for their loss. However, it's important to note that many indemnity clauses do not protect against contributory or gross negligence. On the other hand, a hold harmless clause is a legal stipulation that prevents one party from being liable to the other for any damages or injuries that may occur during the execution of a contract, especially in high-risk ventures. This clause essentially transfers the risk of financial loss from one party to another. The key difference between the two lies in the level of protection they offer. While an indemnity clause provides financial compensation after an incident of negligence, a hold harmless clause aims to prevent any potential liability or claim from arising in the first place.
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