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abhijit majumder (practicing company secretary)     03 August 2023

Query on indemnification clause in agreement


The respected fellow experts

Our company enter into a food product supply agreement with Company 'X' the clauses of the proposed agreement inter alia states:

1. X supply  formula /recipe  for the food items. which we have to follow strictly.

2.  X check our factory to ensure that products are produced by following hygienic norms as prescribed by 'X'.

3. X check finished products before accepting the products.

Beside all the above clauses there is an indemnification clause which states that if ultimate consumer suffer any physical problem by consuming the products our company will be liable.

My objection on behalf of our company is, only after satisfying himself with the above 3 clauses the X accepts the products. Hence thereafter any problem with the product  not our company , but X will be liable. Hence i want to drop the Indemnification clause.

Please suggest whether my view is proper?




 3 Replies

T. Kalaiselvan, Advocate (Advocate)     03 August 2023

Though the indemnification clause would be for a formality, since it is essential in the view point of the opponent, you  may not be permitted to ignore it.

Since this may be considered as a legal requirement by the opponent for a valid agreement, it cannot be avoided.

Vikash Tiwari   04 August 2023

You can dilute this clause as follows:

if ultimate consumer suffer any physical problem due to wilful manufacturing defect or adulteration our company will be liable.

abhijit majumder (practicing company secretary)     04 August 2023

Sincere thanks to Sir Vikash Tiwari  and Sir T Kalaiselvan  for giving their views.
I think i will adopt Sir Vikash Tiwari 's recommendation.


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