Implied Indemnity

Definition

Implied Indemnity is an obligation to indemnify or compensate for loss or damage that arises from the circumstances of the parties involved, rather than from explicit terms within a contract.

Purpose

Implied indemnity ensures that a party who has incurred losses or damages due to the actions or negligence of another party is compensated, even if there is no explicit indemnity clause in the contract. This is crucial for maintaining fairness and equity in business and personal relationships.

Examples of Use

• A contractor might seek implied indemnity from a subcontractor who performed faulty work, resulting in damages or additional costs.
• A manufacturer may be impliedly indemnified by a supplier whose defective parts caused a product recall.

Related Terms

• Express Indemnity: An indemnity obligation clearly stated in a contract.
• Negligence: Failure to exercise the care that a reasonably prudent person would exercise in like circumstances.
• Liability: The state of being responsible for something, especially by law.

Notes

Implied indemnity often requires proving that the indemnifying party was at fault or that the indemnified party acted in reliance on the indemnifying party's conduct.