United States: Duty To Indemnify/Duty To Defend

Last Updated: April 25 2019
Article by Earl R. King, Jr.

When drafting contracts, parties must always consider the risk associated with the transaction. One of the most common ways to limit risk is by including an indemnity provision. However, as a best practice, indemnity alone is not enough to limit a contracting party's risk. In addition, a duty to defend provision should also be included as part of the indemnity provision of every contract. This article will examine the significance of each.

Despite the enactment of Georgia's apportionment statute (O.C.G.A. 51-12-33), it is well settled that Georgia law continues to recognize two broad categories of indemnity. These categories are indemnification created by contract, such as between a surety and a debtor, and common law vicarious liability between principals and agents.

Under Georgia law, the obligation to indemnify for damages and the obligation to defend against third-party suits are separate and distinct. Ashton Park Trace Apartments, LLC v. City of Decatur, 2015 WL 11618243 (N.D. Ga. Oct. 21, 2015). While the duty to defend arises if the facts as alleged in the complaint "even arguably" are within the coverage of the indemnification provision, the duty to indemnify arises only if liability actually exists under the indemnification language.

What is indemnification?

Generally, indemnification (or indemnity) is an undertaking by one party to compensate the other party for certain costs and expenses. In Georgia, indemnity is imposed either by law or contract.

Implied Indemnity

State law indemnity is a remedy implied under common law or statute, and arises out of obligations imposed through a preexisting relationship. O.C.G.A. § 11-2-312(3). The extent to which this obligation is imposed depends on the applicable state law, the nature of the transaction, and the nature of the relationship between the parties. Generally, Georgia courts impose an implied indemnity on a contractual relationship only in the absence of an indemnification provision. For example, a claim for common law indemnification exists when a party is vicariously liable for a tort committed by another and is compelled to pay damages because of negligence imputed to him or her as a result.

Parties relying on implied contractual indemnity generally face unpredictable outcomes and may not be able to obtain certain types of reimbursement, for example, attorneys' fees. To avoid uncertainty, the parties to an express indemnity provision may choose to include a disclaimer of the right to implied indemnity.

Contractual Indemnity

Parties to a contract use a contractual indemnity provision to customize risk allocation. Under Georgia law, the nature of an indemnity relationship is determined by the intent of the parties as expressed by the language of the contract. Georgia courts interpret indemnification agreements in the same manner as other contracts. Specifically, the indemnity agreement will be enforced according to its terms if the language is clear and unambiguous. If the language is ambiguous, courts strictly construe the language against the indemnified party with every presumption against an intention to indemnify; and construe any ambiguities against the drafter.

Indemnification clauses vary widely, but under a typical indemnification provision, the obligor (indemnifying party) promises to reimburse the obligee (indemnified party) from and against any and all "losses, liabilities, claims, and causes of action" (recoverable damages) incurred by the indemnified party that "cause," "arise from," or are "related to" (nexus phrase) the specified events giving rise to the indemnity obligation (covered events). An insurance policy is a classic example of a contractual indemnity.

In many cases, parties negotiating an indemnity clause also negotiate a "duty to defend" clause, under which, the indemnifying party promises to defend the indemnified party against third-party claims (e.g., litigation or arbitration), caused by or arising from either the indemnifying party's breach of contract or the indemnifying party's acts or omissions, even if the acts or omissions are not breaches.

Duty to Indemnify vs. Duty to Defend

Under an indemnity provision, the indemnifying party agrees to reimburse the indemnified party for costs and expenses (losses) resulting from direct claims (by the indemnified party against the indemnifying party), third-party claims, or both. Georgia courts require reimbursement for all incurred losses which are covered under the parties' contract. In Georgia, a judgment fixing legal liability is not a condition precedent to recovery under an indemnity clause. O.C.G.A. § 51-12-32(c). 

The obligation to defend is usually broader than the obligation to indemnify, because it will apply whether or not the third-party claim has merit. The obligation to defend requires the indemnifying party to reimburse for covered defense costs and expenses actually paid (losses), which may include costs and expenses associated with appeals. Moreover, depending on the terms of the contract, the indemnifying party may have the right to assume and control the defense of the claim. An indemnified party always wants the indemnification provision to expressly include the duty to defend because defense costs can often be substantial, even if the indemnified party prevails on the claim.

Indemnification and defense clauses are often highly negotiated, and it is important to understand the strengths and weaknesses associated with the inclusion or exclusion of either in any contract. If you are negotiating a contract, please contact the Drew, Eckl, and Farnham Corporate Team for advice on the construction of these and any other contractual terms.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions