Understanding Indemnity

Nowhere in a meeting contract can you find more legalese than in the indemnification clause. Consequently, no clause is more misunderstood by both planners and suppliers. But, surprisingly, indemnification is one of the simplest concepts in these contracts.

We live in a world in which, if someone is injured, he will certainly file suit. And the question that victim asks is not, "Who is the one person responsible for my injury whom I should sue?" Instead, the question now asked is, "Who are ALL the people with ANY money at all whom I could possibly sue?" As a result, hotels and groups often find themselves as defendants in lawsuits that they really have nothing to do with. Defending such suits (or pre-suit claims) is both expensive and troubling.

Indemnification clauses exist to fix just this problem. Taken in plain English, when one party indemnifies the other, it says this: If you get sued or a claim is made against you because someone was injured or damaged because I screwed up, you don't need to worry about it; I will take care of it (which means I will pay your attorneys' fees to defend you and if a judgment is entered against you, I will pay the amount of that judgment).

That's simple enough, but one must ask two additional questions before using indemnification. The first is this: What kind of screw-ups will be indemnified? Some clauses have one party indemnify the other against acts of negligence; others deal only with gross negligence or intentional misconduct. Negligence is any failure to do what a reasonable person in a similar circumstance would do (or doing something which a reasonable person would not do). Gross negligence is an intentional failure to do something a reasonable person would do, in reckless disregard of the consequences.

The second question is: What is the degree of responsibility? In some states, when someone is injured because of one party's negligence, that party's responsibility may be reduced by the degree of fault of the injured party. In other words, in those states, when someone slips on water at a hotel and the hotel knew water was on the floor yet failed to clean it up or warn about, the hotel's liability may be reduced if a jury determines that the plaintiff is 30 percent responsible for her own injury because she was running carelessly through the lobby with slippery shoes on right after swimming . If your contract is for an event to be held in a state where the law addresses comparative negligence, you should be indemnified by the other party, but only to the extent of its responsibility. Ask your lawyer about the law of the state in which you will meet.