What Is an Indemnification Agreement and Why Do You Need It?

by Isaac Benmergui, Esq on January 30, 2014

Money talks in the legal system; that remains to be true. However, rights are rights, and oftentimes parties and entities have the right to protect their interests in the event something goes wrong contractually under real estate law. It’s amazing what can be done on a piece of paper and signature – it’s called an indemnification agreement.

This is a case involving Parker Towing Company, Inc. and Triangle Aggregates, Inc. Recently addressed by the Supreme SignatureCourt, we’ve got a situation here where an argument arose about Parker Towing’s right to indemnity of an amount of $25K. What is indemnity? Essentially, if you incurred expenses, often of the legal kind, resulting in your favor, if you’re entitled to indemnity, you’re entitled to reimbursement of those expenses due to the fact that the court decision was in favor of you. We see this all the time in numerous facets of law, and that includes real estate law.

This, however, is a different situation: the Supreme Court actually denied Parker Towing Company their indemnification of $25K for one reason – they had apparently signed an “indemnification agreement,” drafted to protect the best interest of both parties in question.

Parker Towing, of course, had an argument, namely of breach of contract. The Supreme Court, however, stood strong on its stance of legal binding contracts. The indemnification agreement, regardless of other contracts or any breaches, remains legal and binding. This is the nature of law, though, when you pursue any action. It will cost money. Unless such an agreement wasn’t drafted in the first place to protect any parties, everyone pays their dues.

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