Legal Question in Administrative Law in California
Indeminfication Clause in an Business Agreement
Explain the Following:
9.1 Area Director understands and agrees that violation of its covenants and agreements contained in this Agreement may cause XYZ International irreparable harm and damage, that may not be recovered at law, and agrees that remedies for breach may be in equity by way of injunctive relief, as well as for damages and any other relief available, whether in law or in equity. Area Director agrees to indemnify, save, and hold XYZ harmless against any and all claims for loss, liability or damage, including attorneys� fees, arising out of a violation of this Agreement or a breach of the duty of good faith and fair dealing.
1 Answer from Attorneys
Re: Indeminfication Clause in an Business Agreement
This clause embodies at least two legal principles often found in contracts: the first, discussing irreparable harm, sets the stage for asking for an injunction at the same time suit is filed, which (if granted) gives the plaintiff some immediate relief without having to await trial and judgment. It can be a potent tool in both deterring and punishing breaches.
The second part attempts to place full financial responsibility on the prospective defandant for all the consequences of a breach, including legal costs such as attorney fees, investigators, expert witness fees, etc.
Neither consequence is a dead certainty, since there are always defenses against injunctions and indemnitiy clauses, but the drafter of the contract quoted has taken steps to make a breach of the contract very painful for the defendant.
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