When reviewing a proposed indemnity clause, you need to consider whether it should be based upon percentages of fault. For example, assume that an architect was 20% at fault for the cause of water intrusion inside a building because the wall detail was flawed. Assume also that the general contractor was 80% at fault because it failed to properly install a weather resistant barrier. It would not be fair for the architect to agree to indemnify the developer for 100% of the damages claimed by the new homeowner. Despite this, many indemnity clauses require this result.
To craft a reasonable and fair provision, you need to make sure that the indemnity is given “only to the extent” of fault. For example, you might draft a clause like this:
“Architect agrees to indemnify Owner to the extent that such claims arise out of or relate to Architect’s negligent acts, errors or omissions.”
You should also consider adding a provision permitting fault to be allocated between the person to be indemnified and the person who has the obligation to indemnify. A sample clause is below:
“Owner and Architect intend that these indemnity obligations apply even if a claim or loss arises in whole or in part from the negligence, strict liability, statutory liability, or other wrongful act or omission of the indemnified party. In such event, the indemnifying party’s obligation to indemnify shall be reduced in proportion to the indemnified party’s contributing negligence or fault.”
You can include provisions like these to minimize your liability for any indemnity obligation.