Indemnity Clauses:

Indemnity clauses are clauses in a Lease that allow a party to transfer a risk of liability to the other party. It is common for the landlord to receive greater protection under indemnity clauses than the tenant.  For example, a tenant may not be able to seek indemnity from the landlord should a third party be injured on the property during the term of the Lease, instead the tenant alone will remain liable to the third party.

There are generally exceptions as to when indemnity clauses will apply. A party may be able to claim an indemnity if the other party has been negligent or reckless and it is this conduct that has been the catalyst for the loss, damage or risk that has occurred.

In the example provided above, the tenant may be able to seek an indemnity from the landlord if a third party is injured because of the negligence of the landlord in failing to adequately remedy a building defect where it is this defect that has caused the injury.

It is very important, prior to becoming a party to a Lease Agreement, that you seek advice on indemnity clauses and how they may affect you in certain circumstances. In our experience landlords include wide indemnity clauses for their own protection whilst simultaneously restricting the circumstances in which the tenant can claim an indemnity against them.

We can assist landlords in the drafting of the Lease Agreement to reduce their exposure to liability. We can also assist tenants in advising on the terms of the Lease Agreement and in the negotiation process, which will usually include negotiating the indemnity clauses proposed by the landlord.

If you wish to speak with a solicitor from our team, please contact our firm by telephone on (02) 9233 4048 or send an email to info@navado.com.au

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