Indemnities in IT and outsourcing contracts

In most forms of technology or outsourced services agreement, there will be a number of provisions which provide for liability to be imposed on an “indemnity” basis. Some seem to pass by without substantial debate or negotiation, whilst others can be amongst the hardest fought provisions in the entire contracting process. However, there seems to be limited uniformity in either the extent of the use of such provisions, or even on their desired or actual impact. This article accordingly looks at the various contexts in which indemnities appear in IT and outsourcing contracts, and the ways in which they are likely to be interpreted by the courts, as well as some practical drafting issues which often arise.