Indemnity

===With negotiations===
Indemnities can be expensive enough to bankrupt a company which pays them: "If manufacturers&nbsp;... are to survive, they will need liability insurance, as well as favorable contracts with retailers. If you look at a big retailers, such as Trader Joe's or Costco or Walmart or Randalls, very often there will be an indemnity provision providing that, if you want to sell a product in our stores, and if it gets someone sick or if it has to be recalled, and it's your fault, you must pay us back for that."<ref name="NFE-20190103">{{Cite news |url=https://newfoodeconomy.org/mccain-foods-salmonella-listeria-recall-2018/ |title=The biggest food recall of 2018 is one you still haven't heard about |last=Bloch |first=Sam |date=3 January 2019 |work=New Food Economy |access-date=8 February 2019 }}</ref>

When a contract is "negotiable," the indemnitor negotiates to control those legal costs. It will not let the indemnified party (indemnitee) overspend: "An arrangement in which the indemnitee makes decisions about how to defend and settle the claim while the indemnitor writes the checks presents a [[moral hazard]]. Knowing that its defense and settlement costs are being borne by the indemnitor, the indemnitee may be encouraged to engage a more expensive legal team or pursue a riskier defense strategy than it would otherwise. For this reason, most indemnitors are unwilling to indemnify against claims when they do not control the defense of the claim."<ref name="steinberg">{{cite journal | url=http://www.dailyreportonline.com/id=1202747710279/Indemnity-Procedures-and-Liability-in-IT-Contracts?mcode=0&curindex=0&curpage=ALL | title=Indemnity Procedures and Liability in IT Contracts |author1=Steinberg, Jim  |author2=Lance McCord | journal=Daily Report | date=January 2015}}</ref>

The [[American Bar Association]] has published advice on negotiations of construction contracts: that (1) owners try to get contractors to indemnify as much as possible and for (2) contractors (a) indemnify only for their own negligence and (b) "establish a right but not a duty for the contractor to defend under an indemnification claim."<ref name="PP2014-28.5">{{Cite journal |journal=Probate and Property |first1=Bruce W. |last1=Merwin |first2=Joanne |last2=Linley |first3=Tracy L. |last3=Steedman |url=https://www.tklaw.com/files/Publication/632aa92a-f020-4001-bbc8-d5a1d3e83c60/Presentation/PublicationAttachment/5c85c61b-0b85-4777-93ff-d95505b1d707/ABA_PP_v028n05__critical_construction_contract_clauses.pdf |title=Critical Construction Contract Clauses |publisher=[[American Bar Association]] |year=2014 |volume=28 |issue=5 |archive-url=https://web.archive.org/web/20171211160957/https://www.tklaw.com/files/Publication/632aa92a-f020-4001-bbc8-d5a1d3e83c60/Presentation/PublicationAttachment/5c85c61b-0b85-4777-93ff-d95505b1d707/ABA_PP_v028n05__critical_construction_contract_clauses.pdf |archive-date=11 December 2017}}</ref>

An example of letting the indemnitor control costs is in the case of a contractor for a homeowners' association (HOA) in which "Contractor shall indemnify, defend (by counsel reasonably acceptable to Association) and hold harmless the Association."<ref name="stirling">{{cite web | url=http://www.davis-stirling.com/MainIndex/HoldHarmlessIndemnify/tabid/539/Default.aspx | title=Hold Harmless & Indemnify | publisher=Adams-Stirling Professional Law Corp | access-date=22 April 2016}}</ref> Companies and HOAs also use indemnity to protect directors since few would serve as directors if their risks were not indemnified.<ref name="cam">{{cite web |title=Association Answers: Are HOA board members protected from lawsuits? |date=4 September 2012 |url=https://www.communityassociationmanagement.com/c49-legal-compliance/c57-ask-the-experts/association-answers-are-hoa-board-members-protected-from-lawsuits/ |access-date=22 April 2016 |publisher=Community Association Management, reprinted from [[The Charlotte Observer]]}}</ref> Negotiation is important for both parties. "Just about all homeowner association management contracts have a provision which states that the HOA shall indemnify the manager under certain circumstances&nbsp;... There are several ways the indemnification clause can be drafted and both management and HOA must take into account what protects each the best."<ref name="thompson">{{cite journal | url=http://realtytimes.com/consumeradvice/hoaadvice1/item/7280-20070321_indemnifymanag | title=Indemnify the HOA Manager | author=Thompson, Richard | journal=Realty Times | date=March 2007}}</ref>

If indemnitors can negotiate a limit on liability in their contract, that limits the cost of a potential indemnity if they "make clear in the agreement that any limitations of liability (whether in the form of caps or exclusions of certain types of damages{{Snd}} e.g., consequential) apply to the&nbsp;... indemnification."<ref name="corpcounsel">{{cite journal | url=http://www.corpcounsel.com/id=1202759907099/Some-IP-Indemnification-Considerations-for-Tech-Vendors | title=Some IP Indemnification Considerations for Tech Vendors | author=Michael Bloom, Lindsey Chandler and Alexa Peterson | journal=Corporate Counsel | date=13 June 2016}}</ref>