This is Part 4 of my four‑part series on indemnification clauses. In Part 3, we looked at baskets and caps, the tools that limit when indemnity starts and how far it goes. Now we turn to carve‑outs and survival periods, two concepts that can quietly expand or extend liability.
These terms often appear deep in the fine print, but they can have major consequences.
Carve‑Outs: The Exceptions That Change Everything
Carve‑outs are categories of claims that are not subject to baskets or caps. They often include:
- Fraud
- Gross negligence
- Willful misconduct
- Intellectual property infringement
- Confidentiality breaches
Carve‑outs matter because they can turn a “capped” indemnity into an uncapped one if the claim falls into an excluded category.
A lawyer’s role is to make sure carve‑outs are narrowly defined and not so broad that they swallow the protections you negotiated.
Survival Periods: How Long Indemnity Lasts
A survival period sets the time limit for bringing indemnification claims. Without one, indemnity can last indefinitely.
Typical survival periods include:
- 12–24 months for general claims
- Longer periods for tax, IP, or environmental claims
A lawyer will help you match the survival period to the type of risk, and prevent the other party from keeping you on the hook forever.
Why These Tools Matter
Carve‑outs and survival periods determine:
- Which claims expire early
- Which claims are unlimited
- How long you can be sued
- How long you must maintain insurance
- How long you must retain records
These terms often matter more than the indemnity clause itself, and they’re almost always negotiable.
The Bottom Line
Carve‑outs and survival periods can dramatically expand or limit your indemnity exposure. A lawyer can help you understand what’s carved out, how long indemnity lasts, and whether the clause fairly reflects the risks of the deal.
To learn more about “Carve‑Outs and Survival Periods: The Hidden Traps Inside Indemnification Clauses” please contact Beresford Booth at info@beresfordlaw.com or by phone at (425) 776-4100.