The Importance of Indemnity Clauses

Engel Professional Association • August 10, 2022

Few adults go through life without insurance policies that indemnify them from losses and damages attributable to them. There is auto insurance liability coverage that protects them from paying for injuries and damages they cause through their own negligence. There is premises liability coverage in a homeowner’s policy that does the same for property negligence. In the event of a claim against them, they count on the insurance coverage to pay a claim or judgment rather than digging into their own pockets.


When it comes to contracts entered into by individuals or businesses, the underlying value of indemnification is the same. It protects from financial loss. At Engel Professional Association, protecting our business clients, either by creating indemnity clauses in contracts or enforcing them, is an important part of what we do. We have been delivering experienced legal counsel to our business clients in Minneapolis, St. Paul, Maple Grove, St. Cloud, Woodbury, Mankato, and across Minnesota for more than 20 years.

What Are Indemnity Clauses All About?

Indemnity clauses are also referred to as “hold-harmless provisions” because that’s what they do. They hold a party harmless for damages related to a contract. When parties sign the contract, they agree on who is financially responsible for potential damages and who is not.


The indemnifying party agrees to bear the costs of judgments by a third party against the indemnified party. They also provide the indemnifying party with the obligation to defend a third-party claim by paying for the costs associated with defending the claim. With that obligation comes the indemnifying party’s right to take over the defense of the claim, even when the defendant is the indemnified party. 


For example, you have probably seen language in a contract that states that a party agrees to “…release, acquit, discharge, and hold harmless [the company] and its employees, agents, and assigns from any and all liability arising from any circumstance, including the negligence of [the company] and its employees, agents, and assigns.”


This example can provide you tremendous protection from liability if you are “the company.” You can also see how it can leave you financially exposed if you are not “the company.”


This example is extremely broad in scope but common in contracts. There are many other indemnifications that may be included in a contract, such as the indemnified party’s ability to recover attorney’s fees and expenses which are not usually recoverable in a civil lawsuit or commercial litigation.

What Types of Acts Might Indemnity Clauses Cover?

There are four types of incidences that well-crafted indemnity clauses may address:


  1. Breach of contract;
  2. Bodily injury or wrongful death claims;
  3. Negligence; and,
  4. Non-compliance with any laws.

Why Are Indemnity Clauses Important?

There are two basic reasons why indemnity clauses are important. First, it allows you to assume the amount of risk you agree to take when working with the other party. Second, it protects you from bearing the financial burden of claims and judgments for damages when the other party is far more able to bear them. 

How Are Indemnity Clauses Enforced?

Indemnity clauses are enforceable in Minnesota courts, so long as they do not violate any state laws regarding the scope of indemnification. For example, Minnesota has a specific statute that addresses the unenforceability of certain agreements in construction contracts.


Enforcement may be pursued using any method designed to resolve breach of contract disputes. Negotiation and arbitration may be viable, although a lawsuit is usually necessary for enforcement, particularly where large sums of money are on the line.

Legal Support You Can Trust

Contracts are vital documents in business, and indemnity clauses provide critical protections within them. You should work with an experienced business attorney to not only draft your contracts but to review any agreements before you sign them. When disputes arise, your attorney can defend your company.


If your business is in Minneapolis, St. Paul, or anywhere in Minnesota, call Engel Professional Association today to schedule a consultation about indemnity clauses and other contractual issues.

How to Handle Creditors’ Claims as an Executor or Trustee

By Engel Professional Association • March 22, 2023
Someone who passed away may have left a will that appoints an executor or created a trust that appoints a trustee to manage their affairs. One of the many responsibilities executors and trustees have is to handle creditors’ claims. This can be a difficult process, but with the right knowledge, it can be done efficiently and effectively. If you were appointed as the executor of someone’s estate or named as a trustee, you might need the assistance of a knowledgeable estate planning attorney when handling creditors’ claims. Our attorney at Engel Professional Association helps executors and trustees complete their appointed duties while also making sure that the deceased’s wishes are upheld. With an office in Minneapolis, Minnesota, we provide legal assistance to those appointed as executors and trustees in St. Paul and other parts of Minnesota, including Maple Grove, Mankato, Woodbury, and St. Cloud.

Breach of Express or Implied Warranty

By Engel Professional Association • February 21, 2023
As a business owner, you pour your heart and soul into your company and your customer base. You know the meaning of hard work and dedication, but you also know that running a business isn’t without its challenges. Many of these challenges you can handle on your own, while others may require you to turn to a commercial litigation attorney. This is especially true if you’re facing a lawsuit by a customer regarding a breach of warranty, whether it’s an express warranty or implied warranty. If you’re in Minneapolis, St. Paul, or anywhere across Minnesota, including Mankato, Maple Grove, St. Cloud, or Woodbury, call our team at Engel Professional Association to schedule a consultation.

Can I Sue for Bad Reviews Against My Business?

By Engel Professional Association • January 25, 2023
Since the introduction of the internet and smartphones, consumers have been able to research a business’s reputation before making a decision on whether to use their services or buy their products. In fact, it is said that 86 percent of all U.S. customers search online for reviews of a business before becoming a patron. On the flip side of this are the people – customers – who post reviews on sites like Yelp. Sometimes these reviews can help make or break a business. While most reviews simply state a person’s honest opinion – good, bad, or indifferent – some reviewers overstep their legal boundaries and post defamatory comments. Worse, a competing business may pose as a customer and post a made-up review slamming a business. Can the business owner fight back by taking the reviewer to court? In cases of actual defamation, that may be the logical route to take if other actions can’t get the review rescinded and exposed. But for reviewers who simply recap their experience and state an honest opinion about the product or service they acquired, there are laws that protect them. If your business is suffering reputational damage by an online reviewer, or reviewers, in or around Minneapolis, Minnesota, contact the commercial and business litigation attorney at Engel Professional Association. We will review the posts or comments online that are causing your firm reputational harm and advise you of your best options going forward, including a defamation lawsuit if warranted. Our firm proudly serves clients not only in Minneapolis and St. Paul but also across Minnesota, including Mankato, Maple Grove, St. Cloud, and Woodbury.

Creating a Business Succession Plan

By Engel Professional Association • December 29, 2022
Estate planning is the process of putting the right legal instruments and people in place to take care of your loved ones should something happen to you, whether it be incapacitation or death. If you own a business, wholly or partially, that certainly must be a prime consideration in estate planning. Owning a business is also, most likely, the path to retirement for you, so along with an estate plan, you need to create a business succession plan not only for when you decide it’s time to retire but also for unexpected life changes and, of course, for life’s finality. Alarmingly, according to the Minnesota Center for Employee Ownership (MNCEO), 85 percent of all businesses do not have a business succession plan in place, and half of all owners are 55 or older and nearing retirement age. If you’re involved in business ownership in or around Minneapolis or St. Paul, Minnesota, contact the estate planning attorney at Engel Professional Association. We have helped countless others like you not only create estate plans to care for their loved ones when they’re gone, but also to have a plan in place if a business is involved. We proudly serve clients across Minnesota, including in Mankato, Maple Grove, St. Cloud, and Woodbury.

A Look at the Merger & Acquisition Process

By Engel Professional Association • December 7, 2022
Following the pandemic and lockdowns in 2020, merger and acquisition (M&A) activity grew across the U.S. and the globe in 2021, not only in value but in volume. In fact, deal value in M&A activity reached $5.9 trillion, setting a record. The Minneapolis-St. Paul area also saw growth, with the highest level of activity since 2000. There are generally two players in an M&A transaction – the acquiring company and the target company. In a merger, the two companies become one, while in an acquisition, the target company is absorbed into the acquirer’s orbit. M&A can take months or years to complete and require several steps on both acquirer and the target company to ensure everything goes smoothly and everyone ends up with what they were promised. If you and your business are looking to enter the M&A market, or you’re already in the process of merging with or acquiring another business in or around the cities of Minneapolis and St. Paul, contact the Engel Professional Association. With more than 20 years of experience in business law, we have advised and guided many in the M&A process. Contact us today if you’re entering or about to enter the M&A marketplace. We proudly serve clients across Minnesota, including Mankato, Maple Grove, St. Cloud, and Woodbury.

Key Provisions of a Stock Purchase Agreement

By Engel Professional Association • October 19, 2022
If you set about to acquire another company, whether through a merger and acquisition (M&A) or an outright purchase, there are two major means of closing the deal: purchasing the company’s assets or purchasing the company’s stock. If you seek to acquire the company by taking over the requisite number of its outstanding stock to have majority control – or even 100-percent sole control – you will need to do so through a Stock Purchase Agreement (SPA), sometimes referred to as a Securities Purchase Agreement. In everyday terms, an SPA is a contract between buyer and seller, just like a purchase between a home seller and a homebuyer. When it comes to acquiring stock, however, there are factors to consider that would not normally be present in a simple home sale and purchase. For instance, the value of the stock can rise and fall, sometimes in a matter of days or even hours. You may agree to a purchase price of $50 a share when the publicly traded shares are going for $42 each, but suddenly those shares plunge to $24. Also, the stock may be held privately, so in fact, there is no public valuation available. In that case, you will have to do your own valuation of what the company – and therefore, the stock you’re purchasing – is worth. Whether publicly traded or privately held, stock and its value, and that of the target company itself, need to be addressed with contingency and other clauses in the Stock Purchase Agreement. An SPA is not a simple downloadable form, where all you need to do is fill in the blanks. An SPA needs more thought and input than that. If you’re seeking to acquire a business in or around Minneapolis or St. Paul, Minnesota, contact the business acquisition attorney at Engel Professional Association. We bring more than two decades of experience in guiding and advising individuals and businesses in the acquisition of target companies. We will help you draft and finalize a Stock Purchase Agreement that protects your rights and contains provisions for handling disputes and adverse changes that threaten the closing of the deal. Outside of the Twin Cities, we also work with clients in Mankato, Maple Grove, St. Cloud, and Woodbury, as well as Milwaukee, Madison, and Hudson, Wisconsin.

Using DIY Legal Templates for Business Can Be Disastrous

By Engel Professional Association • September 30, 2022
A quick search for online legal templates yields thousands of results that offer simple and easy-to-use tools. All you need to do is to fill in the blanks and you are good to go. Unfortunately, it is not that simple. Using those do-it-yourself (DIY) legal templates could spell disaster for your business. At Engel Professional Association, our business law attorney in Minneapolis, Minnesota, can help you draft contracts so that they are customized to your particular goals and needs. We understand that contracts are an essential part of any business, regardless of the company’s type and size. From our office in Minneapolis, we serve entrepreneurs and business owners across Minnesota, including St. Paul, Woodbury, Maple Grove, Mankato, and St. Cloud.

Understanding Buy-Sell Agreements

By Engel Professional Association • July 18, 2022
A buy-sell agreement may sound like it’s a mechanism for buying and selling businesses, but that’s not exactly the case. A buy-sell agreement is an agreement forged between co-owners of a business to cover the departure of one owner because of retirement, divorce, bankruptcy, death, or just a simple desire to move on to a different pursuit. Other terms for a buy-sell agreement include buyout agreement, business will, and business prenup. In other words, a buy-sell agreement protects the interests of both the departing employee (or their estate) and the remaining owners. Such arrangements prevent confusion, disarray, and the prospect of that co-owner’s share being sold to a third party that the other owners object to. Even when a buy-sell agreement is in place, one or more of the co-owners might feel that a lawsuit is the best way to guarantee their interests are being fully taken care of. Even if no lawsuit has been filed, a co-owner or two may want to seek a legal opinion on what’s transpiring, putting the prospect of a lawsuit in plain sight. If your business is facing the departure of one co-owner and you need to make sure your rights and investment are being properly protected, contact Engel Professional Association. We have more than two decades’ experience in helping businesses make smooth transitions when challenges arise. We will review your buy-sell agreement and advise you on implementing its provisions in everyone’s best interests. If there is already a legal action pending, we will represent your interests. Engel Professional Association proudly serves clients in and around Minneapolis, Minnesota, as well as Woodbury, Maple Grove, St. Cloud, Mankato, and St. Paul.

What You Need to Know About Commercial Leases

By Joanna Haboon • June 9, 2022
Commercial leases in Minnesota are regulated by federal and state law, as well as by local ordinances, zoning and safety codes, contract law, and relevant court decisions. Specifically, the relationship of landlord and tenant is spelled out in Minnesota Statutes, Chapter 504B. A commercial lease is much more complex than a residential lease; and often requires serious attention to detail by both landlord and tenant, along with negotiations to clarify all aspects of the transaction. It is best for both parties to seek guidance from an experienced commercial real estate attorney. If you’re in the Minneapolis, Minnesota area, contact the Engel Professional Association. We have 20-plus years’ experience helping with real estate transactions of all types, including commercial leases. Engel Professional Association serves clients in Minneapolis, St. Paul, and across Minnesota, including Mankato, Maple Grove, St. Cloud, and Woodbury, as well as the areas of Milwaukee, Madison, and Hudson, Wisconsin.
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