A Grant Agreement documents funding terms for projects or research initiatives. This playbook explores performance milestones, reporting requirements, and clawback conditions.
Why This Matters: Proper indemnification clauses allocate risk and incentivize accurate disclosures, and without clear indemnity terms, parties face uncertain liabilities and protracted disputes.
Negotiation strategy
If you're the Grantor:
Negotiate for a broad indemnification clause that covers all potential liabilities, including third-party claims. Ensure that the indemnity cap is high enough to cover potential losses.
If you're the Grantee:
Limit the scope of indemnification to specific, foreseeable risks and negotiate for a reasonable cap on liability. Include a basket to avoid liability for minor claims.
Essential elements
1
Indemnity Obligations
Defines each party's indemnity duties.
2
Indemnity Procedure
Outlines process for indemnity claims.
3
Indemnity Cap
Sets maximum liability for indemnity.
Action framework
ACCEPT
Propose edits if the indemnity cap is too low or if the procedure for claims is unclear.
EDIT
Reject if the clause lacks a clear procedure or if the indemnity obligations are unreasonably broad.
ADD
Add language to include a basket or to clarify the duration of indemnity obligations.
PRO TIP
Always ensure that the indemnity clause includes a clear procedure for handling claims and a reasonable cap on liability.
Example clauses
FAVORABLE
Comprehensive Indemnity Clause
"Each party agrees to indemnify, defend, and hold harmless the other from any losses arising from third-party claims due to their breach or negligence."
NEUTRAL
Basic Indemnity Clause
"The Indemnifying Party shall indemnify the Indemnified Party for losses resulting from its breach of this Agreement."
UNFAVORABLE
Vague Indemnity Terms
"Indemnification will be provided as necessary for any claims."
Fallbacks
High-Risk Transactions
In high-risk transactions, consider increasing the indemnity cap and including specific triggers for indemnification to manage potential large claims.
Cross-Border Deals
For cross-border deals, ensure indemnity terms comply with local laws and address currency fluctuations in potential claims.
Technology Agreements
In technology agreements, include indemnity for intellectual property infringement and data breaches to protect against specific industry risks.
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