A Mutual NDA establishes reciprocal obligations to protect proprietary and confidential information. This playbook addresses definition scope, duration, and permitted disclosure exceptions.
Why This Matters: Proper indemnity terms protect against unexpected claims and align potential losses with the party best positioned to manage them.
Negotiation strategy
If you're the Disclosing Party A:
Negotiate for broad indemnification coverage to include all potential breaches and third-party claims. Ensure survival periods and caps are reasonable and reflect the transaction's risk profile.
If you're the Disclosing Party B:
Limit indemnification obligations to specific breaches and claims. Advocate for shorter survival periods and lower caps to minimize potential liabilities.
Essential elements
1
Indemnity Triggers
Specific events triggering indemnity.
2
Survival Periods
Duration indemnity obligations last.
3
Baskets and Caps
Limits on indemnity amounts.
Action framework
ACCEPT
Propose edits when triggers are overly broad or survival periods are excessive.
EDIT
Reject clauses that impose unlimited liability or lack clear caps.
ADD
Add language to cover jurisdiction-specific requirements or missing liabilities.
PRO TIP
Always consult local counsel to ensure indemnification terms comply with jurisdiction-specific laws.
Example clauses
FAVORABLE
Preferred Indemnification Clause
"The indemnifying party shall indemnify, defend, and hold harmless the indemnified party from and against any and all losses, liabilities, claims, damages, and expenses arising from breaches of representations, warranties, or covenants."
NEUTRAL
Standard Indemnification Clause
"The parties agree to indemnify each other against any claims, losses, or damages arising from breaches of this agreement, subject to agreed-upon caps and survival periods."
UNFAVORABLE
Overly Broad Indemnification
"The indemnifying party shall indemnify the indemnified party for any and all claims, without limitation."
Fallbacks
High-Risk Projects
In high-risk projects, ensure indemnification covers all potential liabilities, including environmental and regulatory claims, with extended survival periods.
Cross-Border Transactions
For cross-border deals, include indemnification terms that address currency fluctuations and international compliance issues.
Technology Agreements
In tech agreements, focus on indemnification for IP infringements and data breaches, with specific caps and survival periods.
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