An Executive Employment Agreement sets forth compensation, duties, and protections for senior executives. This playbook highlights negotiation around severance, equity awards, and restrictive covenants.
Why This Matters: Without clear indemnification and liability caps, the business may face unlimited claims and the contractor may be exposed to unanticipated liabilities.
Negotiation strategy
If you're the Company:
Ensure that liability is capped at a reasonable amount and that indemnification is mutual. Require the contractor to maintain adequate insurance coverage to mitigate potential risks.
If you're the Contractor:
Negotiate for a fair cap on liability that reflects the scope of work. Ensure indemnification obligations are balanced and insurance requirements are feasible.
Essential elements
1
Limitation of Liability
Caps on damages and liabilities.
2
Indemnification
Mutual protection against claims.
3
Insurance Requirements
Mandatory coverage types and limits.
Action framework
ACCEPT
Propose edits if liability caps are too high or indemnification is one-sided.
EDIT
Reject clauses that expose the company to unlimited liability or lack mutual indemnification.
ADD
Add clauses if insurance requirements are missing or insufficient.
PRO TIP
Always verify that insurance certificates are up-to-date and meet the agreed-upon requirements.
Example clauses
FAVORABLE
Preferred Limitation of Liability
"The liability of each party under this Agreement shall be limited to direct damages only, and in no event shall either party be liable for any indirect, incidental, consequential, special, or punitive damages, including but not limited to loss of profits or revenue, even if advised of the possibility of such damages."
NEUTRAL
Standard Indemnification
"Each party agrees to indemnify the other for any claims arising from their own negligence."
UNFAVORABLE
Unlimited Liability Exposure
"The contractor shall be liable for all damages, without limitation, arising from the performance of this agreement."
Fallbacks
High-Risk Projects
For projects involving sensitive data or high-value transactions, increase insurance coverage limits and tighten indemnification terms to mitigate risks.
International Agreements
Consider local laws and regulations that may affect liability and indemnification terms in cross-border contracts.
Small-Scale Contracts
For smaller contracts, simplify liability and indemnification terms to reflect the lower risk and value involved.
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