IndemnityNegotiable

Mutual Indemnity

What this clause says

Each Party shall indemnify, defend, and hold harmless the other Party from and against any third-party claims arising out of the indemnifying Party's gross negligence or willful misconduct.

What this means in plain English

Each side covers the other if their own bad behavior causes a third-party lawsuit.

What it means for a CDMO program

This is the favorable structure — push for it. Pure mutual indemnity with a "gross negligence or willful misconduct" trigger is much narrower than a one-way indemnity for "any claim arising out of Manufacturer's services."

How this evaluates

The Decoder applies these rules in order; the first match wins.

indemnity › structure equals mutual → Compliant: Mutual indemnity is the favorable structure.
indemnity › structure is one of one-way-manufacturer, unknown → Borderline: Confirm indemnity is mutual or push to make it so.

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Mutual Indemnity — common questions

Is mutual indemnity actually mutual?

In pharma/device MSAs, rarely. The "mutual" wording usually has carve-outs that favor the sponsor — IP, regulatory, brand reputation. Read the carve-outs carefully.

What insurance backs the indemnity obligation?

CGL primarily, with products as the heavy lifter for manufacturing claims. Some indemnity language reaches further than insurance covers — that is the gap to negotiate.

Can I cap my indemnity at insurance limits?

Sometimes — depends on negotiation leverage. Sophisticated CDMOs negotiate a cap at policy limits with carve-outs for gross negligence and willful misconduct.