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Contractual & Equitable Indemnity/Indemnification

 “Indemnity” or “indemnification” is the legal term for the shifting of responsibility from one party to another. Beller v. Martin306 S.W.3d 108, 110 (Mo. Ct. App. 2010). In contract law, a common indemnification provision (frequently called a “hold harmless” clause”) will provide that in the event one person is held liable or sought to be held liable, someone else will defend and/or reimburse him in whole or in part. Automobile insurance, for example, will often provide that the insurance company will indemnify you for liability by providing a law firm/attorney to represent you and paying the first one-hundred thousand dollars ($100,000) of any judgment or settlement in which you’re responsible. The numbers can obviously vary in the insurance context depending on the nature and extent of the coverage. Independent of insurance, indemnity is often agreed upon by individuals in a business transaction to help consummate deals (failure to follow a contractual indemnity provision can itself give rise to a breach of contract claim). 

Indemnity can also be ordered by a Court in an exercise of its equitable power. In contrast to a contract, equitable (implied-in-law) indemnity is when the law imposes indemnity due to the relationship of the parties regardless of contractual intention. A party asserting equitable indemnity, therefore, is arguing that because of the special nature of the case’s circumstances, equity demands that one party indemnify the other. This is often invoked between two individuals accused of committing a tort or other civil wrong and one is seeking recovery against the other. A principled right to indemnity rests on relative responsibility and is determined by the facts as applied to that issue. Missouri Pac. R. Co. v. Whitehead & Kales Co., 566 S.W.2d 466 (Mo. 1978).

Indemnification is often confused/conflated with “contribution.” Missouri Courts have noted that indemnity and contribution are often used interchangeably; however, it is more appropriate to use indemnity in referring to a claim for 100 per cent reimbursement and contribution in referring to a claim for partial reimbursement. Stephenson v. McClure, 606 S.W.2d 208, 211 (Mo. Ct. App. 1980).