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Be careful what-you contract for: duty to defend versus duty to indemnify.

Article Excerpt
There is little doubt indemnity clauses serve as a powerful device to protect "the indemnitee" against potential damages to third parties arising out of the indemnitee's contractual relationship with "the indemnitor." For instance, when a third party files a claim against one or both, the indemnitor is required to underwrite the indemnitee for moneys paid or expenses incurred. In effect, indemnity clauses shift the risk of each party's potential for future liability.

Parties negotiating o contract may be willing to accept the risk associated with indemnification in exchange for more favorable contractual terms (i.e.) lower price, additional services offered, etc. Since the indemnitor is only on the hook if a third party is successful with their claim, savvy negotiators can assign a value to the indemnity clause based on their estimation of the probability a third party might be successful with the cause of action in addition to other factors such as the third...

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