Indemnification Clause
A contract provision where one party agrees to cover losses, damages, or legal costs the other party incurs as a result of specific actions or claims.
In a financing agreement, an indemnification clause might require the business to cover a lender’s legal costs if a dispute arises from the business’s own actions or misrepresentations, shifting that financial risk onto the borrower.
Understanding the scope of an indemnification clause, what it actually covers and how broadly, is a meaningful part of reviewing any financing or commercial agreement before signing.
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