Copy-paste ready email templates for negotiating indemnification clauses in NDAs. Covers mutual vs. one-way indemnification, liability caps, and common scenarios from both disclosing party and receiving party perspectives.
When to use: The draft NDA contains one-way indemnification that only protects the other party. Use this template to request mutual indemnification obligations.
[Name],
Thank you for sending over the draft NDA. We have reviewed the agreement and have one significant concern regarding Section [X] (Indemnification).
As currently drafted, the indemnification obligation runs only one direction - requiring [our company] to indemnify [your company], but not vice versa. Given that this is a mutual NDA where both parties will be sharing confidential information, we believe the indemnification provisions should be mutual as well.
We propose revising Section [X] to require each party to indemnify the other for breaches of their respective confidentiality obligations. This creates symmetrical risk allocation that reflects the mutual nature of the information exchange.
We are comfortable with the scope of indemnification as drafted - our concern is solely with making it bilateral. Could you please confirm this revision is acceptable, or let us know if you would like to discuss further?
Best regards,
[Your Name]
Justify One-Way Indemnification
Receiving PartyDefending Position
When to use: The other party is pushing back on one-way indemnification that favors your side. Use this to explain the commercial rationale for asymmetric indemnification.
Subject:Re: NDA - Indemnification Discussion
[Name],
Thank you for your comments on the indemnification provision. I understand your preference for mutual indemnification, but I wanted to explain the rationale behind our current approach.
While this is structured as a mutual NDA, the practical reality is that the information flow is substantially one-directional. [Your company] will be sharing [describe: proprietary technology/trade secrets/customer data/financial projections] that represent significant value and competitive advantage. By contrast, the information we expect to receive is more limited in scope and sensitivity.
Given this asymmetry in information value and the potential consequences of disclosure, we believe the indemnification structure should reflect the actual risk profile. A breach involving your confidential information would have materially different consequences than a breach of ours.
That said, we are open to discussing a tiered approach - perhaps mutual indemnification with different caps that reflect the relative value of each party's information. Would that be a workable compromise?
Best regards,
[Your Name]
Request Reasonable Liability Cap
Disclosing PartyAdd Cap
When to use: The indemnification clause has no liability cap, creating unlimited exposure. Use this to propose a reasonable cap while preserving protection for confidentiality breaches.
Subject:Re: NDA - Indemnification Liability Cap
[Name],
Following up on our review of the NDA, we would like to discuss adding a cap to the indemnification obligations in Section [X].
As currently drafted, the indemnification is unlimited, which creates exposure that is difficult for us to quantify, insure against, or approve internally. Our standard position on NDAs is to include a liability cap that provides meaningful protection while limiting potential exposure to a reasonable amount.
We propose the following revision:
"Each party's total indemnification obligations under this Section shall not exceed [the greater of $1,000,000 or two times the fees paid under any related commercial agreement between the parties]."
This cap provides substantial protection for confidentiality breaches while giving both parties certainty about maximum exposure. We are flexible on the specific amount and happy to discuss what makes sense for both sides.
Importantly, we would expect this cap to apply only to ordinary breaches - we are comfortable with carve-outs for willful misconduct or gross negligence, where the cap would not apply.
Please let me know your thoughts.
Best regards,
[Your Name]
Defend Existing Liability Cap
Receiving PartyMaintaining Cap
When to use: The other party wants to remove or significantly increase the indemnification cap. Use this to defend the existing cap while showing flexibility on structure.
Subject:Re: NDA - Indemnification Cap Discussion
[Name],
Thank you for your comments requesting removal of the indemnification cap. I understand the desire for maximum protection, but I need to explain why an uncapped indemnification obligation is not something we can agree to.
First, as a practical matter, unlimited indemnification creates unquantifiable risk that affects our ability to get internal approval and maintain appropriate insurance coverage. Our risk management policies require caps on contractual indemnification.
Second, unlimited indemnification in an NDA is unusual in the market. Standard practice is to cap indemnification at some multiple of fees paid or a fixed dollar amount, with carve-outs for egregious conduct.
Here is what we can offer as a middle ground:
1. Increase the cap from [$X] to [$Y], which reflects the sensitive nature of your information
2. Add a carve-out so the cap does not apply to willful or intentional breaches
3. Add a carve-out for gross negligence in handling confidential information
4. Ensure the cap does not limit your right to seek injunctive relief
This structure ensures you have full recourse for serious breaches while providing us with predictability for ordinary situations. Would this work for your team?
Best regards,
[Your Name]
Carve Out Confidentiality Breaches from Cap
Disclosing PartyExpand Protection
When to use: The NDA has a liability cap that also limits recovery for confidentiality breaches. Use this to request that confidentiality breaches be carved out from the cap.
[Name],
We have reviewed the limitation of liability and indemnification provisions in the draft NDA and have a concern about how they interact.
Currently, Section [X] caps all liability, including liability for confidentiality breaches, at [$X]. While we understand the need for liability caps generally, applying this cap to confidentiality breaches undermines the core purpose of the NDA.
The confidential information we will be sharing includes [trade secrets/proprietary algorithms/customer lists/financial data] that, if disclosed, could cause damages far exceeding the current cap. A [$X] cap essentially puts a price tag on a breach that may not reflect actual harm.
We propose adding a carve-out to Section [X] as follows:
"The limitations set forth in this Section shall not apply to a party's breach of its confidentiality obligations under this Agreement."
This preserves the liability cap for other claims while ensuring full accountability for the specific risk this agreement is designed to address. We believe this is a reasonable compromise that reflects the purpose of an NDA.
We are happy to discuss alternative structures, such as a higher cap specifically for confidentiality breaches, if an unlimited carve-out is not acceptable.
Best regards,
[Your Name]
Add Comparative Fault Carve-Out
Receiving PartyLimit Exposure
When to use: The indemnification clause does not account for the other party's contributory fault. Use this to add a carve-out so you are not liable for their own negligence or misconduct.
[Name],
Thank you for your patience as we complete our review. We have one additional comment on the indemnification provision.
As currently drafted, the indemnification obligation is absolute and does not account for situations where the indemnified party's own conduct contributed to the loss. We do not believe it is appropriate to indemnify [your company] for claims that result in whole or in part from [your company's] own actions.
We propose adding the following carve-out:
"Notwithstanding the foregoing, neither party shall be obligated to indemnify the other to the extent that the claim arises from: (a) the indemnified party's own negligence, willful misconduct, or breach of this Agreement; (b) the indemnified party's failure to comply with reasonable security requirements; or (c) the indemnified party's unauthorized modification or misuse of Confidential Information."
This ensures that indemnification covers genuine breaches by the receiving party, not situations where the disclosing party failed to protect its own information or contributed to the problem.
Please confirm this addition is acceptable.
Best regards,
[Your Name]
Reject Inadequate Cap Amount
Disclosing PartyIncrease Cap
When to use: The other party proposed a liability cap that is too low given the value of information being shared. Use this to push back firmly but professionally.
Subject:Re: NDA - Indemnification Cap Concerns
[Name],
Thank you for your proposed revisions to the indemnification section. While we appreciate your willingness to engage on this issue, we cannot accept an indemnification cap of [$X].
To be direct: a [$X] cap is not meaningful protection for the information we will be sharing. We are disclosing [describe nature: proprietary technology worth $Y in R&D investment / customer relationships representing $Y in annual revenue / trade secrets that form the basis of our competitive position]. A cap that low essentially makes the indemnification provision worthless as a practical matter.
We need a cap that bears some reasonable relationship to the potential harm from disclosure. Our minimum acceptable position is:
Option A: Cap of [$amount] for ordinary breaches, with no cap for willful misconduct
Option B: Cap equal to [X times fees paid under any commercial agreement], minimum [$amount]
Option C: Removal of the cap entirely for confidentiality breaches, with the cap applying only to other claims
We are committed to finding a workable solution, but the current proposal does not adequately protect our interests. Please let us know which of these alternatives you could support, or propose a counter that addresses our concerns.
Best regards,
[Your Name]
Accept Mutual with Modified Procedures
Receiving PartyCompromise
When to use: You are willing to accept mutual indemnification but want to add procedural protections. Use this to agree in principle while securing favorable procedures.
[Name],
Thank you for your comments on the indemnification provision. After internal discussion, we are prepared to accept mutual indemnification, subject to the following procedural requirements that we would like to add:
1. Notice: The indemnified party must provide prompt written notice of any claim (within 10 business days of becoming aware), including copies of any legal filings or demands received.
2. Defense Control: The indemnifying party shall have the right to assume control of the defense with counsel of its choosing, provided such counsel is reasonably acceptable to the indemnified party.
3. Cooperation: The indemnified party shall provide reasonable cooperation in the defense, at the indemnifying party's expense for out-of-pocket costs.
4. Settlement Rights: The indemnifying party shall not settle any claim in a manner that imposes non-monetary obligations on the indemnified party, or that does not include a full release, without prior written consent.
5. No Prejudice: Failure to provide timely notice shall not relieve the indemnifying party of its obligations except to the extent actually prejudiced by such failure.
These are standard procedural protections that ensure orderly claims handling while preserving both parties' rights. Please confirm these additions are acceptable, and we can finalize the provision.
Best regards,
[Your Name]