Indemnity agreements are commonplace in the business world, typically found in contracts, leases, licenses and bylaws. The agreement provides that one party (the indemnitor) will “hold harmless and indemnify” the other (the indemnitee) for liability arising out of the relationship. The agreement often requires the indemnitor to provide insurance coverage for the indemnitee under a specific type of policy for a specific amount of coverage. Not every indemnity agreement specifically addresses the defense obligation. The courts are loath to add any indemnity obligation if not specifically stated in the agreement.
Indemnity agreements are strictly construed. Courts look at the sophistication of the contracting parties and the entire document in determining the parties’ intent if the agreement is not explicit. The General Obligations Law (GOL) prohibits an indemnitee from being indemnified for its own negligence in a variety of contracts, including leases, construction contracts, catering establishments, architects, engineers and surveyors, garages and recreation facilities.
