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Indemnity Agreement

R549

Create a clear indemnity agreement that records who is protected, what risks or losses are covered, what claims are excluded, whether liability is capped, and what procedures apply when a claim arises.

An Indemnity Agreement is used where one party agrees to protect another party against specified losses, claims, damages, liabilities, or expenses. It is commonly used in commercial contracts, supplier arrangements, events, access-to-premises forms, construction projects, consulting agreements, service contracts, data-processing arrangements, intellectual-property licensing, equipment use, transport, and high-risk activities. The agreement should clearly define the covered risks, excluded losses, claim procedure, insurance requirements, liability limits, and whether the indemnity survives termination of the main agreement.

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South African legal context (2026 checklist)

An indemnity should be drafted carefully because it can shift significant financial risk from one party to another. The wording should be clear, specific, and proportionate to the actual risk. Where the indemnity is used in a consumer context, the Consumer Protection Act requires risk, liability-limitation, assumption-of-risk, and indemnity provisions to be brought to the consumer’s attention in plain language and in a conspicuous manner. Certain unfair or prohibited terms may be unenforceable. The agreement should not attempt to excuse unlawful conduct, fraud, wilful misconduct, or liability that cannot lawfully be excluded. Where personal information is handled as part of a claim, POPIA obligations should also be addressed.

  • South African common law of contract
  • Law of delict
  • Consumer Protection Act 68 of 2008
  • Section 22: Plain and understandable language
  • Section 48: Unfair, unreasonable or unjust contract terms
  • Section 49: Notice required for certain terms and conditions
  • Section 51: Prohibited transactions, agreements, terms or conditions
  • Section 52: Powers of court to ensure fair and just conduct, terms and conditions
  • Protection of Personal Information Act 4 of 2013
  • Section 19: Security measures on integrity and confidentiality of personal information
  • Section 20: Information processed by operator or person acting under authority
  • Section 21: Security measures regarding information processed by operator
  • Section 22: Notification of security compromises
  • Electronic Communications and Transactions Act 25 of 2002
  • Companies Act 71 of 2008, where a company is a party and signing authority is relevant
  • Occupational Health and Safety Act 85 of 1993, where workplace or site risks are involved
  • Compensation for Occupational Injuries and Diseases Act 130 of 1993, where workplace injury risk is involved
  • Prescription Act 68 of 1969
  • Arbitration Act 42 of 1965, where arbitration is selected as the dispute-resolution mechanism
  • Barkhuizen v Napier 2007 (5) SA 323 (CC)
  • Beadica 231 CC and Others v Trustees for the time being of the Oregon Trust and Others [2020] ZACC 13
  • Naidoo v Birchwood Hotel [2012] ZAGPJHC 59

Use this as a starting point only. Verify current gazetted amendments, tribunal rules, and SARS / DOL circulars that may apply to your matter.

Typical questions we'll walk you through

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What is the full legal name of the party giving the indemnity?
What is the full legal name of the party giving the indemnity?
What is the full legal name of the party receiving the indemnity?
What is the full legal name of the party receiving the indemnity?
Is either party a company, individual, partnership, trust, NPO, municipality, or public body?
Is either party a company, individual, partnership, trust, NPO, municipality, or public body?
What activity, event, contract, project, service, transaction, or risk does the indemnity relate to?
What activity, event, contract, project, service, transaction, or risk does the indemnity relate to?
What losses, damages, claims, costs, fines, expenses, legal fees, or liabilities must be covered?
What losses, damages, claims, costs, fines, expenses, legal fees, or liabilities must be covered?
Will the indemnity cover third-party claims only, or also direct losses between the parties?
Will the indemnity cover third-party claims only, or also direct losses between the parties?
Will the indemnity cover injury, death, property damage, data breaches, IP infringement, employee claims, tax claims, regulatory penalties, or breach of contract?
Will the indemnity cover injury, death, property damage, data breaches, IP infringement, employee claims, tax claims, regulatory penalties, or breach of contract?
Are any losses excluded, such as fraud, wilful misconduct, gross negligence, unlawful conduct, or losses caused by the indemnified party?
Are any losses excluded, such as fraud, wilful misconduct, gross negligence, unlawful conduct, or losses caused by the indemnified party?
Will there be a financial cap on liability?
Will there be a financial cap on liability?
Will the indemnity be unlimited for certain claims?
Will the indemnity be unlimited for certain claims?
Must the indemnifying party maintain insurance?
Must the indemnifying party maintain insurance?
What type and amount of insurance is required?
What type and amount of insurance is required?
What notice must be given when a claim arises?
What notice must be given when a claim arises?
Who will control the defence, settlement, or negotiation of third-party claims?
Who will control the defence, settlement, or negotiation of third-party claims?
Can a claim be settled without the other party’s written consent?
Can a claim be settled without the other party’s written consent?
Will legal costs be covered on an attorney-and-client scale or party-and-party scale?
Will legal costs be covered on an attorney-and-client scale or party-and-party scale?
Will the indemnity survive expiry, cancellation, or termination of the main agreement?
Will the indemnity survive expiry, cancellation, or termination of the main agreement?
Is the agreement being used with consumers, employees, contractors, suppliers, visitors, event participants, or customers?
Is the agreement being used with consumers, employees, contractors, suppliers, visitors, event participants, or customers?
Does the indemnity need a conspicuous warning or separate signature?
Does the indemnity need a conspicuous warning or separate signature?
Will personal information be processed or disclosed when handling claims?
Will personal information be processed or disclosed when handling claims?
What law will govern the agreement?
What law will govern the agreement?
How will disputes be resolved?
How will disputes be resolved?
Who is authorised to sign the agreement on behalf of each party?
Who is authorised to sign the agreement on behalf of each party?

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