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Indemnification
An indemnification is an agreement by one party to secure the other against loss or damage and to make that person whole. This provision shifts risk of liability or loss from one party to another, often without regard to fault.
What is the difference between an indemnification and hold harmless agreement?
A hold harmless agreement is an agreement or contract in which one party agrees not to hold the other party responsible for damage or other liability arising from the transaction involved. The parties may agree between themselves not to assert certain claims against each other. An indemnification is broader and includes an agreement to hold harmless against claims by third parties. The provision will list acts and liabilities covered by the indemnity/hold harmless. Many times, the clause will include a requirement to “defend, indemnify and hold harmless” from all acts and include requirement to pay all attorney fees and court costs.
Can Virginia Tech agree to an indemnification provision?
NO. State law prohibits a state agency from agreeing to indemnification without approval of the Governor.
What rationale should be used in taking exception to this clause?
Indemnification/Court Costs/Attorney fees
As a state agency, Virginia Tech is prohibited from indemnifying other parties without approval from the Governor [see Va Code section 2.1-191.11(A)(1)(c)]. The basis for an agency’s inablility to agree to an indemnification agreement or the payment of attorney’s fees and court costs is rooted in Virginia Constitution Article X, Section 9, which prohibits any debt other than (1) debts to meet emergencies and redeem previous debt obligations, (2) general obligation debt for capital projects and sinking fund, or (3) debts for certain revenue-producing capital projects. None of these exceptions permit the state to incur a debt such as that contemplated by an indemnification agreement or the payment of attorney’s fees and court costs.
Can alternative language can be used?
Yes. Use the following:
The University is and will be acting as an independent contractor in the performance of this work, and it shall be solely responsible where found liable to the extent covered by insurance for payment of any and all claims for loss, personal injury, death, property damage, or otherwise, arising out of any act or omission of its employees or agents in connection with the performance of this work.
Last update: September 24, 2002
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