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In the Spotlight: Beware of 'Lite' Indemnification

By Randolph M. Perkins
August 30, 2007

Some commercial landlords consider indemnification clauses in leases to constitute mere 'legal boilerplate' that do not merit attention from a business perspective. Some lawyers, feeling pressure to minimize the length of lease documents, may seize upon this clause as an opportunity to save space. As a result, it is not uncommon to encounter abbreviated indemnification clauses. At first glance, the language appears suitable. However, when put to the test, these 'lite' clauses often leave landlords unsatisfied. This article demonstrates the value of 'kicking it up a notch' by including ingredients called for in the recipe but often left out of the mix.

Sample 'Lite' Clause

Few landlords are willing to forego indemnity protection from tenants. However, when presented with the following clause, many landlords ' and perhaps some attorneys ' would feel comfortable.

Tenant shall indemnify and hold Landlord harmless against, and defend Landlord from, * all obligations, actions, assessments, losses, liabilities, damages (including without limitation special, consequential, exemplary, punitive and similar damages), costs and expenses paid or incurred, including without limitation penalties, interest on any amount payable to a third party as a result of the foregoing and any legal or other expenses reasonably incurred in defending any claims or actions, suffered or incurred by Landlord as a result of the negligence ** of Tenant or Tenant's employees, agents and invitees. *** ****

This seems like pretty comprehensive protection ' especially given the length of the sentence. Not so. It leaves unanswered many questions to which landlords want answers when the clause becomes operative. For illustrative purposes, the sample clause above has been marked with asterisks to indicate spots that are relevant to these questions. The same clause, refined by the changes discussed in the following section, appears in the box to the right.

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