Got a $200K contract with F500 company. Their MSA has an indemnification clause that basically says I'm liable for any and all damages without limit. My E&O insurance only covers $1M. This seems insane. How do I negotiate this?
Standard enterprise overreach. They send the same MSA to everyone. Almost always negotiable. Common modifications:
1. Cap indemnification at contract value or insurance limits
2. Exclude consequential/indirect damages
3. Make it mutual (they indemnify you too)
4. Limit to third-party claims only
5. Require they give you control of defense
Key things to negotiate:
Carve-outs for IP indemnification: You should only indemnify for claims that your work infringes third-party IP — not for their misuse of deliverables.
Liability cap: "Total aggregate liability under this agreement shall not exceed the greater of (a) amounts paid in the 12 months preceding the claim, or (b) $X."
Carve-out for gross negligence/willful misconduct: Caps shouldn't apply to intentional bad acts.
At $200K, they expect you to push back. Their legal team has seen these requests before.
Word of warning: some F500 procurement teams have zero authority to modify legal terms. Ask early if they can actually negotiate, or if you need to escalate to their legal department. Saves time.
Also: get your own lawyer to redline it. The $2-3K for contract review is nothing compared to the risk on a $200K deal.
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