What is the difference between an indemnity and a limitation of liability?

A limitation of liability reduces what a party may owe. An indemnity does the opposite: it puts specific losses on one party, especially those caused by third-party claims. The two clauses must be drafted together to avoid contradictions.

What does hold harmless mean in a contract?

It describes a clause by which one party undertakes to cover the other against claims. In a contract governed by civil law, it is better to describe the covered risks and the claims procedure precisely rather than rely on the English phrase alone.

Should a supplier indemnify its client against IP infringement?

It is a common and reasonable request when the supplier creates or supplies the items concerned. The supplier can limit the indemnity to items it actually supplied and exclude the client's own modifications or instructions.

Clause templatesCommercial

Indemnification clause

An indemnification clause requires one party to cover the other against certain losses, especially third-party claims: infringement, data breaches, damage caused by a product. It allocates specific risks in advance, instead of leaving each party to prove the other's fault afterwards. It must be targeted and come with a clear claims procedure.

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Clause template

1. [NAME OF INDEMNIFYING PARTY] shall indemnify [NAME OF INDEMNIFIED PARTY] against any third-party claim, action or judgment arising from [RISKS COVERED: infringement of third-party intellectual property rights by the Deliverables / breach of data protection rules / other], and shall reimburse amounts awarded against it by an enforceable decision or an approved settlement, together with reasonable defence costs. 2. The indemnified party shall notify the indemnifying party in writing within [NUMBER] days of receiving the claim, allow it to conduct the defence and not settle without its written consent. 3. This indemnity does not apply where the claim results from a modification, instruction or improper use attributable to the indemnified party. 4. Where the claim concerns infringement of third-party rights, the indemnifying party may, at its own cost, obtain the right to continue using, modify or replace the item concerned. 5. This indemnity [IS / IS NOT] subject to the liability cap set out in this agreement.

Replace the bracketed items before use.

Variants

Mutual version

Each party shall indemnify the other against third-party claims arising from its own breaches of this agreement, or from its own fault or that of its staff, under the same notification and defence conditions. Each indemnity is subject to the cap set out in this agreement, except in the case of fraud or gross fault.

When to use it

A client asks you to cover it if your software or content infringes a third party's rights.
An influencer or agency creates content published under your brand.
You buy a product or business and want cover against earlier debts or disputes.
A subcontractor processes your customers' personal data.

Mistakes to avoid

Drafting a general indemnity against "any loss", which turns it into unlimited insurance without a premium.
Forgetting the procedure: notice period, conduct of the defence, no settlement without consent.
Failing to align the indemnity with the limitation of liability clause, which creates a contradiction.
Importing a common-law hold harmless clause without adapting it to the applicable civil-law concepts.

Contracts that use this clause

Frequently asked questions

A limitation of liability reduces what a party may owe. An indemnity does the opposite: it puts specific losses on one party, especially those caused by third-party claims. The two clauses must be drafted together to avoid contradictions.

Other Commercial clauses

Sources

Code des obligations et des contrats (Tunisia), consolidated text

Indicative template, to adapt to your situation. It does not replace legal advice.

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Indemnification clause

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Variants

Mutual version

Mistakes to avoid

Drafting a general indemnity against "any loss", which turns it into unlimited insurance without a premium.

Forgetting the procedure: notice period, conduct of the defence, no settlement without consent.

Failing to align the indemnity with the limitation of liability clause, which creates a contradiction.

Importing a common-law hold harmless clause without adapting it to the applicable civil-law concepts.