This is Part 1 of a four‑part series on indemnification clauses when buying or selling a Washington business. Indemnification clauses are one of the most powerful, and most underestimated, parts of any business contract. In Washington, they routinely determine who pays when something goes wrong, who carries the legal exposure, and how much of that exposure can be shifted to another party.
Yet most business owners skim right past them. That’s understandable, these clauses are dense and easy to gloss over. But it’s also exactly why having a lawyer involved early matters. A lawyer reads what others skip and translates legal jargon into real‑world consequences for whichever side of a deal you’re on.
What an Indemnification Clause Actually Does
At its core, an indemnification clause says:
“If X happens, you have to pay for it, not me.”
That can include:
- Lawsuits filed against you by other parties
- Property damage
- Employee injuries
- Intellectual property claims
- Regulatory violations
In other words, indemnification is the clause that decides who writes the check when the unexpected happens. A lawyer’s job is to identify exactly what “X” is in your contract, who is on the hook, and whether that matches your expectations as a buyer or seller.
Why Businesses Should Care
Washington courts enforce indemnification clauses. Poorly drafted or overly broad clauses can leave you paying for risks you never intended to take on.
Common problems I see:
- One‑sided terms that shift all liability
- Language concerning attorney fees
A business lawyer doesn’t just “review” these clauses, they:
- Compare the indemnity language to your actual operations and risk profile
- Revise the clause so you are only responsible for your own fault, not everyone else’s
The Bottom Line
If you sign contracts without reviewing the indemnification language, you may be accepting someone else’s liability without realizing it. A quick review, or a small revision, can save you from a six‑figure surprise. In practice, that means sending the contract to your lawyer before you sign, not after a claim is made. Preventing a bad indemnity clause is almost always cheaper than litigating one.
To learn more about Indemnification Clauses: An Underestimated Risk in Washington Contracts, please contact Beresford Booth at info@beresfordlaw.com or by phone at (425) 776-4100.