What is a likely outcome of including an indemnification clause in contracts?

Including an indemnification clause in contracts is primarily aimed at providing legal protection for one party against potential negligence claims. This clause serves to allocate risk between the parties involved, whereby one party agrees to compensate the other for certain damages or losses, which may arise from specific actions, inactions, or negligence during the course of the contract.

In the context of construction or contracting, this means that if one party is held liable for damages due to negligence, the indemnification clause can ensure that the other party is held harmless and is not left bearing the financial burden of that liability. In effect, it protects a party from claims arising from the negligence of another party involved in the contract, promoting a clearer understanding of responsibility and accountability.

For example, if a subcontractor causes damage on the job site due to negligent work practices, an indemnification clause may allow the general contractor to seek reimbursement for any costs or claims that arise from that negligence, effectively shifting the financial risk back to the subcontractor.

The other possible outcomes mentioned, like reduction of project costs, increased speed of project completion, or greater overall project quality, may be secondary effects and are not the primary purpose of including an indemnification clause. While a robust risk management strategy, which includes indemnification provisions