I know, talk to a lawyer! But thought I'd ask here anyway.
Just got a new "service agreement" from a distributor (I've redacted the distributor for now), and I was reading through it and stopped at the Indemnification clause. I'm not liking subsection (i) very much.....
9. Indemnification. Dealer shall indemnify, hold harmless, and defend {Distributor}, its affiliates,
and their respective officers, directors, agents and employees against all claims, liabilities, costs,
damages, judgments, suits, actions, losses and expenses, including reasonable attorney’s fees and
costs of suit, arising out of or resulting from any third party claim in connection with: (i) allegations
that the Services infringe or violate any intellectual property rights or other proprietary or nondisclosure
rights of a third party;
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I'm not sure why I would be asked to take on the responsibility of a third party claim that says the service the distributor is providing violates IP rights, proprietary or nondisclosure rights. Seems like I have zero control of that "service", and cannot have an effect on that in any way through my own action or inaction. If the distributor business model infringes on another's IP rights, why is it my responsibility to defend that???
Now, if something I did (or didn't do) results in a claim against the distributor, I can see taking responsibility for that. But this? Not feeling it. The indemnification is only one-way now too, a very distinct change in language from the last agreement I signed (2015). That one read:
Both parties agree to indemnify and hold one another harmless against any liability for all claims and to the extent such claims are caused by the party's negligent acts. In the event claims are caused by both the parties, they shall be borne by either party and in accordance to their individual acts of negligence.
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The full indemnification clause:
9. Indemnification. Dealer shall indemnify, hold harmless, and defend {Distributor}, its affiliates, and their respective officers, directors, agents and employees against all claims, liabilities, costs, damages, judgments, suits, actions, losses and expenses, including reasonable attorney’s fees and costs of suit, arising out of or resulting from any third party claim in connection with:
(i) allegations that the Services infringe or violate any intellectual property rights or other proprietary or nondisclosure rights of a third party;
(ii) Dealer’s negligence, willful misconduct, breach of any representation or warranty under this Agreement, or failure to perform its obligations under this Agreement;
(iii) any injuries to persons (including death) or damages to property caused by the negligent or willful acts of omissions of Dealer or its employees or subcontractors (except to the extent that such injuries or damages are caused by the gross negligence or willful misconduct of {Distributor} or any of its employees); or
(iv) any BATFE or other regulatory or criminal action or investigation caused by the Dealer’s sales, business practices, or conduct. Dealer shall not settle any such suit or claim without{Distributor}’s prior written consent if such settlement would be averse to {Distributor} interest. Dealer agrees to pay or reimburse all costs that may be incurred by {Distributor} in enforcing this indemnity, including attorneys’ fees. {Distributor} may choose to assist in the management of the defense, keeping the option to decide whether (or when) to retain its own separate counsel at the expense of Dealer.
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Looks like I might be done with this particular distributor and business model......