๐๐ซ๐๐๐ญ๐ข๐ง๐ ๐๐ง ๐ข๐ง๐๐ซ๐ข๐ง๐ ๐๐ฆ๐๐ง๐ญ ๐ข๐ง๐๐๐ฆ๐ง๐ข๐๐ข๐๐๐ญ๐ข๐จ๐ง ๐๐ฅ๐๐ฎ๐ฌ๐ ๐๐ซ๐จ๐ฆ ๐ญ๐ก๐ ๐ฉ๐๐ซ๐ฌ๐ฉ๐๐๐ญ๐ข๐ฏ๐ ๐จ๐ ๐ ๐๐๐๐ (๐๐จ๐๐ญ๐ฐ๐๐ซ๐ ๐๐ฌ ๐ ๐๐๐ซ๐ฏ๐ข๐๐) ๐ฏ๐๐ง๐๐จ๐ซ ๐ซ๐๐ช๐ฎ๐ข๐ซ๐๐ฌ ๐๐๐ซ๐๐๐ฎ๐ฅ ๐๐จ๐ง๐ฌ๐ข๐๐๐ซ๐๐ญ๐ข๐จ๐ง ๐ญ๐จ ๐ฉ๐ซ๐จ๐ญ๐๐๐ญ ๐ญ๐ก๐ ๐ฏ๐๐ง๐๐จ๐ซ’๐ฌ ๐ข๐ง๐ญ๐๐ซ๐๐ฌ๐ญ๐ฌ ๐ฐ๐ก๐ข๐ฅ๐ ๐๐๐ฅ๐๐ง๐๐ข๐ง๐ ๐ญ๐ก๐ ๐ง๐๐๐๐ฌ ๐๐ง๐ ๐๐ฑ๐ฉ๐๐๐ญ๐๐ญ๐ข๐จ๐ง๐ฌ ๐จ๐ ๐ญ๐ก๐ ๐๐ฎ๐ฌ๐ญ๐จ๐ฆ๐๐ซ. ๐๐๐ซ๐’๐ฌ ๐ ๐ฌ๐ญ๐๐ฉ-๐๐ฒ-๐ฌ๐ญ๐๐ฉ ๐๐ฉ๐ฉ๐ซ๐จ๐๐๐ก ๐ญ๐จ ๐๐ซ๐๐๐ญ๐ข๐ง๐ ๐ ๐ฆ๐ข๐ง๐ข๐ฆ๐๐ฅ๐ข๐ฌ๐ญ๐ข๐ ๐ฒ๐๐ญ ๐๐๐๐๐๐ญ๐ข๐ฏ๐ ๐ข๐ง๐๐๐ฆ๐ง๐ข๐๐ข๐๐๐ญ๐ข๐จ๐ง ๐๐ฅ๐๐ฎ๐ฌ๐.
Step 1: Define the Scope of Indemnification
Begin by clearly defining what the indemnification covers. As a SaaS vendor, you typically want to indemnify your customers against claims arising from your software and services, but not for issues arising from the customerโs misuse or modification of the software.
Example:
Vendor shall indemnify, defend, and hold harmless Customer against any third-party claims, demands, suits, or proceedings (“Claims”) alleging that the Services, as provided by Vendor, infringe any intellectual property rights of such third party.
Step 2: Exclusions from Indemnification
Specify any exclusions where the indemnification does not apply. This is crucial to limit the vendor’s liability.
Example:
Vendor shall have no obligation under this Section to the extent that a Claim arises from: (i) use of the Services in combination with any hardware, software, or other materials not provided by Vendor; (ii) modifications to the Services not made by or authorized by Vendor; or (iii) use of the Services in a manner contrary to the written instructions or documentation provided by Vendor.
Step 3: Procedures for Indemnification
Outline the procedures that the customer must follow to claim indemnification. This includes notifying the vendor promptly, providing necessary information, and cooperating with the vendor in the defense of the claim.
Example:
Customer shall promptly notify Vendor in writing of any Claim and shall provide Vendor with all reasonable information and assistance necessary to defend such Claim. Vendor shall have sole control of the defense and all related settlement negotiations.
Step 4: Limitations and Cap on Liability
Establish any limitations or caps on the indemnification liability to avoid unlimited exposure.
Example:
Vendorโs total liability to Customer under this Section shall not exceed the amounts paid by Customer to Vendor under this Agreement in the twelve (12) months preceding the Claim.
Step 5: Remedy for Infringement
Provide a course of action if the services are found to infringe on third-party rights, such as modifying the service or obtaining the necessary rights.
Example:
If the Services are found to infringe, Vendor may, at its option: (i) modify the Services to be non-infringing; (ii) obtain a license for Customer to continue using the Services; or (iii) terminate the Agreement and refund to Customer any prepaid, unused fees.
Step 6: Include a General Disclaimer
It’s often prudent to include a general disclaimer of warranties and liabilities to further protect the vendor.
Example:
Except as expressly provided in this Section, Vendor makes no warranties, express or implied, regarding the Services, and disclaims all other warranties, including any implied warranties of merchantability, fitness for a particular purpose, and non-infringement.
Complete Minimalistic Indemnification Clause:
Combining the elements above, a minimalistic indemnification clause might look like this:
- Indemnification by Vendor. Vendor shall indemnify, defend, and hold harmless Customer against any third-party claims, demands, suits, or proceedings (“Claims”) alleging that the Services, as provided by Vendor, infringe any intellectual property rights of such third party. Vendor shall have no obligation under this Section to the extent that a Claim arises from: (i) use of the Services in combination with any hardware, software, or other materials not provided by Vendor; (ii) modifications to the Services not made by or authorized by Vendor; or (iii) use of the Services in a manner contrary to the written instructions or documentation provided by Vendor.
- Procedures. Customer shall promptly notify Vendor in writing of any Claim and shall provide Vendor with all reasonable information and assistance necessary to defend such Claim. Vendor shall have sole control of the defense and all related settlement negotiations.
- Limitation of Liability. Vendorโs total liability to Customer under this Section shall not exceed the amounts paid by Customer to Vendor under this Agreement in the twelve (12) months preceding the Claim.
- Remedy for Infringement. If the Services are found to infringe, Vendor may, at its option: (i) modify the Services to be non-infringing; (ii) obtain a license for Customer to continue using the Services; or (iii) terminate the Agreement and refund to Customer any prepaid, unused fees.
- Disclaimer. Except as expressly provided in this Section, Vendor makes no warranties, express or implied, regarding the Services, and disclaims all other warranties, including any implied warranties of merchantability, fitness for a particular purpose, and non-infringement.
This minimalistic approach ensures the essential protections are in place while maintaining clarity and simplicity.
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