Indemnity paragraph

[Ricko]

Hi,
I am an engineer so apologies in advance if the question is stupid and/or in the wrong forum. If so, could you please point me to a place where I can ask such question.

I am also NOT looking for legal advice or anything that makes anybody liable in any way, shape or form, I am just looking for pointers/clarification on this paragraph, especially the second part about indemnifying (highlighted).

"By this Agreement, and conditional on the transfer of the IP and delivery of the Deliverables, the Parties release each other from any and all claims, causes of action, demands and liabilities of whatever nature which either Party had in the past, has now or may have in the future arising from or related to the Contract.
The Parties further release and indemnify each other from any and all claims, causes of action, demands and liabilities of whatever nature which may arise from either Party’s obligation to any and all third parties under the Contract."

1. What does it mean?

2. If I sign a document containing that, can it backfire in any way? Can it make me liable in any way? If yes, what reason, excuse or example can I provide to my client to remove it from the document?

Just to provide the full picture...

I have done work for a client for a small amount of money and in order to get paid they insist I sign a release contract to give them all IP and design items. They have been misleading with words in correspondence in the past to get lots of extra work for free so I want to be extra cautious with anything I sign.

Again I am NOT asking for any legal advise, just pointers and clarification on what that does or might mean so I am fully informed when I approach a company law advisor.

Thank you in advance

Rick

 

[Jaysen]

I'm not a lawyer so I'm just going to explain how this works in theory. I may also be incorrect here. If this is a big concern, as you said, you'd be far better off contacting a lawyer for advice.

To indemnify means you promise to reimburse the other party for costs/losses they suffer from a specific event. In this case, the clause is referring to these costs/losses that arise as a result of your obligation to a third party. I'm not clear on what your obligations are to third parties under the contract.

Based on your situation, an example that came to mind could be a situation in which you copied your initial design from a third party. If this was the case, and the third party sued the other party, you may have to indemnify the other party from the costs/losses arising from this. Again, this very much depends on the contract.