Don’t Vouch for a Fool
The Campaign Monitor Blog has a new post titled “Who pays the price when your client doesn’t have permission” about the implications of a client requesting services that may end up being wrongful in some way. While the post specifically deals with Campaign Monitor’s white label email service, it brings up the broader question of indemnity.
Indemnity generally refers to a contractual arrangement where one party agrees to bear the losses or obligations of another party arising out of an agreement. In practice that can mean the indemnifying party steps into the shoes of the party that screwed up or suffered misfortune and becomes liable for any damages covered by the agreement. A common example of this is automobile insurance, where the insurance company indemnifies you for the damages resulting from an automobile accident, compensating whomever you harm for their injuries, and possibly compensating you for your own losses.
In the context of the above article, clients may request services that end up breaking the law or causing damage to others. Beyond the practical tips they provide to avoid problems, an indemnity clause can offer an additional layer of protection if the client is open to it. Whether or not the client is receptive to the idea of indemnity, it’s probably worth fighting for indemnity in situations where it seems like the client is likely to do something stupid, reckless, or just plain risky that could be illegal or harm others.
It’s important to realize that a single agreement can create indemnity from either party to the other, and can even create mutual indemnity where each party agrees to bear the other’s losses. If an agreement you are considering has an indemnity clause, make sure you understand who is indemnifying whom and whether you are comfortable with the arrangement. CYA guys.
Do you guys have any stories where an indemnity arrangement saved you or left you holding the bag? Do you think I misused “whom” anywhere above? Let me know!
