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Indemnification

Hotel Contract Indemnification & Understanding Your Legal Protections

In this video, you’ll learn what indemnification means, you’ll get an understanding of the concept of “mutual indemnification” and how groups can use indemnification as a risk management tool.

Experts

Barbara Dunn (representing Groups) Partner at Barnes & Thornburg, LLP

Lisa Sommer Devlin (representing Hotels) Devlin Law Firm, P.C.

Overview

  • In its simplest terms, indemnification means that if a claim is made against Party A because of something Party B did, and Party B must pay for the claim against Party A.
    • Example: Customer in Hotel’s meeting room leaves an un-taped cord on the ground. Attendee trips over the cord and is injured, and sues the Hotel. The hotel would ask the Customer to indemnify it because the claim is the result of the Customer’s actions, not the Hotel’s. Depending on the type of claim, and the state in which the claim is made, the applicable law may already require some type of indemnification. If parties to a contract agree on indemnification obligations, their agreement will generally apply over the applicable law.

Group Perspective

  • Groups should ensure that an indemnification provision is included in all meeting contracts so that the hotel/vendor will hold the group harmless if the group is sued as a result of the hotel/vendor’s actions.
  • Indemnification provisions should cover defense costs (“indemnify, defend and hold harmless….”)
  • The indemnification provision should protect the group from liability caused by the negligence, gross negligence or willful misconduct of the hotel/vendor, its employees, agents or contractors.
  • Indemnification and insurance go hand in hand: insurance funds the vendor’s commitment to indemnify the group
  • As with any contract clause, groups should have their attorney review any indemnification provision as one word can make a significant difference in what is/is not covered.

Hotel Perspective

  • Under the law of some states, the hotel as operator of the premises can be held responsible even if it did not cause the injury, so indemnification by the customer is important.
  • Even if the law does not make the hotel responsible as the operator, when an injury occurs during an event, the injured party virtually always makes a claim against the hotel, so it is important to have the customer agree to indemnify the hotel.
  • Claims are rarely made against customers for an injury that is the fault of the hotel, so indemnification of the customer by the hotel is less important.
  • Hotels resist “mutual” indemnification clauses, as if a claim is made against both hotel and customer, each side will request the other to indemnify, and so the mutual clause cancels the indemnification out.
  • The vast majority of all injury claims are settled without going to trial, so no final determination of fault or responsibility is made. As a result, the hotel and the customer each end up paying their own costs of defense and share of the settlement without indemnifying the other.