Legal Definitions - indemnitor

An indemnitor is a person or entity that promises to protect another party from financial loss or to compensate them for a loss that has already occurred or might occur in the future. Essentially, the indemnitor takes on the responsibility to cover specific costs, damages, or liabilities that the other party (known as the indemnitee) might face.

Here are some examples to illustrate this concept:

• Software Licensing Agreement: Imagine a small business purchases a new accounting software package. In the licensing agreement, the software company includes a clause stating that it will protect the business from any legal claims of patent or copyright infringement arising from the use of the software. In this scenario, the software company is the indemnitor because it is promising to cover the legal costs and damages if a third party sues the small business for using the software, claiming it infringes on their intellectual property rights.

• Construction Project: A homeowner hires a general contractor to build an addition to their house. The contract between them specifies that the general contractor will be responsible for any injuries to workers or damage to neighboring properties that occur during the construction process due to the contractor's negligence. Here, the general contractor acts as the indemnitor, agreeing to shield the homeowner from financial liability for these specific types of incidents.

• Business Acquisition: When a large corporation acquires a smaller company, the purchase agreement often includes clauses where the seller agrees to indemnify the buyer against certain undisclosed liabilities. For example, if the smaller company had an ongoing lawsuit that was not fully disclosed during the sale, the seller of the smaller company would be the indemnitor, promising to reimburse the acquiring corporation for any financial losses or legal expenses resulting from that undisclosed lawsuit.