In an exchange of emails this evening, my correspondent inadvertently used “indemnitor” when he meant “indemnitee.”
It’s in order to avoid just such confusion that I recommend in MSCD 1.72 that you not use as defined terms for party names any paired defined terms that differ only in their final syllable, such as Mortgagor and Mortgagee.
Given that one uses Indemnitor and Indemnitee when a contract provides that either party could be subject to claims for indemnification, you can’t replace them with the standard alternatives for party-name defined terms. But what to use instead? Indemnifying Party would be fine, but Indemnified Party would be awkward, in that it’s standard to provide that not only is a given party entitled to indemnification but also its affiliates, and representatives of that party and each affiliate, and so on. Describing each member of that broader group as a “Party” would be to invite confusion.
So how about Indemnifying Party and Indemnified Person?
Out of the material contracts filed over the past six months on the SEC’s EDGAR system, Indemnitor was used in only 378 contracts, Indemnitee was used in 1,669 contracts, Indemnifying Party was used in 1,614 contracts, Indemnified Person was used in 686 contracts, and Indemnifying Party and Indemnified Person were used together in 207 contracts. From that I make the following observations:
- The flight from Indemnitor has begun.
- Indemnitee occurs more frequently than Indemnitor because even when only one party has indemnification obligations, those obligations will often run to a broader group than just the other party.
- Used separately, Indemnifying Party and Indemnified Person are mainstream choices.
- Indemnifying Party and Indemnified Person are used together often enough to make this a safe pairing.
What say you?
10 thoughts on ““Indemnitor” and “Indemnitee””
United States lawyers seem not to have progressed in their use of “legal English” since the 18th century. Who ever heard of “indemnitor” and “indemnitee”.
Indemnities are invariably part of a contract or other process involving some larger issue. An example would be where trustees are asked to act in a manner which may at a later time be adjudged to be a breach of trust. So, they seek an indemnity against future actions, etc. The indemnity to be provided by the party benefiting from the trustees’ action will not be improved or diminished simply by the nomenclature adopted. In the above illustration the trustees would be the so-called “indemnitee” and the party providing the indemnity, the so-called “indemnitor” would be described in whatever other manner is appropriate – possibly “beneficiary” would be the most usual but other possibilities are not hard to think of.
Please US lawyers desist from buggering-up our precious common language.
Michael: I’m doing my best to un-bugger-up things! But note that drafters from the Commonwealth countries are no angels either.
Regarding the terminology in question, it arises often in an M&A context. You have the Buyer and the Seller, each potentially being required to indemnify the other and a gaggle of related persons. That’s why you need generic terminology, and it makes sense to choose terms that are semantically linked to the notion of indemnification.
I commonly have indemnity provisions in commercial contracts (i.e. not M&A). Space is at a premium because a long contract is an intimidating contract. And mutuality is important.
We try to limit our indemnity obligations to third-party claims. Claims of breach between the parties are subject to lots of limitations of liability, while indemnity claims are not.
I use “Indemnitor” and “Defendant,” both as defined terms. It seems to work. No one has complained yet. And it reinforces the idea that the indemnity is limited to third-party claims.
I use “indemnifying party” and “protected party” (as well as “protected person”) (all in lower case).
In leases, I define “Landlord Party” to be Landlord and its officers, employees, etc., then have Tenant indemnify each Landlord Party, and if applicable, vice versa.
Then, in the boilerplate language regarding defense obligations, settlement procedure, etc., I use lowercase “indemnifying party” and “indemnified party” (as in “Upon notice from an indemnified party, the indemnifying party will assume. . .”).
Paul: As I noted in the post, I’m not crazy about having Party include someone who isn’t party to the contract. Ken
I am with Michael Batchelor. In England, the person who indemnifies would, if not otherwise defined as some other party in the document, be called the “indemnifier”, and the person who is indemnified is the “indemnified”. I think lawyers risk criticism if they choose to invent words (indemnitee? indemnitor?? – sorry if these are established words in a US dictionary) when ordinary words of the English language exist, and could be used.
“Indemnitor” and “Indemnitee” do smell of invention, and are not found in the (British) Cambridge on-line dictionary, though I can find them in American dictionaries. It is probably the French “-ee” on a word that is (a) Latin (“indemni”) and (b) a noun (whereas “-ee” would normally turn a transitive verb into an object noun) that is slightly odd. Perhaps “Indemnifyee” would be more correct, though also awkward. But I could be going to deep into it.
Like Alam, I would also prefer “the Indemnifier”, but “the Indemnified” brings to mind “the accused” and “the condemned”, so I think I would pair “Indemnifier” with “Indemnified Person”.
Indemnification means to compensate for a loss by the party indemnified by a contract. Is this statement true or false?
Neither. Indemnification means whatever an indemnification provision says it means.