Threat assessment
Indemnification Clause
Indemnification clauses shift liability for breaches and third-party claims. One-sided, uncapped indemnity in NDAs is a common high-risk pattern for freelancers and startups.
What it is
Indemnification requires one party to compensate the other for losses arising from specified events — often breach of confidentiality, IP claims, or third-party lawsuits.
Why it matters
Uncapped one-sided indemnity can exceed the economic value of the entire project. A €5k freelance engagement with unlimited indemnity is a structural mismatch.
Red flags
- Indemnity for all claims without causation limit
- No cap tied to fees paid
- Indemnity for the other party's negligence
- Broad "any and all losses" language
Safer alternatives
- Mutual indemnity for respective breaches
- Cap at 1× contract value or insurance limit
- Carve out consequential damages where permitted
NDAShield perspective
Indemnification often appears alongside governing law and liquidated damages — review as a bundle, not in isolation.