A Non-Compete & Non-Solicitation Agreement restricts post-employment competition and solicitation of clients or employees. This playbook focuses on enforceability standards, scope limitations, and remedies for breach.
Why This Matters: Appropriate indemnification and liability limits prevent disproportionate losses and incentivize risk management.
Negotiation strategy
If you're the Company:
Ensure indemnification clauses cover breaches, negligence, and third-party claims. Negotiate liability caps that exclude gross negligence and willful misconduct.
If you're the Contractor:
Seek to limit indemnification obligations to direct damages and ensure liability caps are reasonable and industry-standard.
Essential elements
1
Indemnification Scope
Defines indemnity obligations.
2
Liability Cap
Limits financial exposure.
3
Risk Sharing
Outlines shared responsibilities.
Action framework
ACCEPT
Propose edits if indemnity scope is too broad or liability caps are absent.
EDIT
Reject clauses that impose unlimited liability or lack mutual indemnification.
ADD
Add clauses to address specific risks or jurisdictional requirements.
PRO TIP
Always review jurisdiction-specific implications to ensure compliance with local laws.
Example clauses
FAVORABLE
Preferred Indemnification Clause
"Party A shall indemnify, defend, and hold harmless Party B from any claims arising from breaches, negligence, or third-party claims."
NEUTRAL
Limitation of Liability Clause
"Total liability shall not exceed the amount paid under this Agreement during the twelve months preceding the claim."
UNFAVORABLE
Risk Sharing Clause
"Parties agree to share risks and maintain insurance coverage sufficient to cover indemnity obligations."
Fallbacks
High-Risk Projects
In high-risk projects, ensure indemnification covers all potential liabilities, including environmental and safety risks.
International Agreements
For international agreements, consider currency fluctuations and local legal systems when setting liability caps.
Technology Transactions
In technology transactions, include indemnification for intellectual property infringement and data breaches.
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