1

I am reading through legal materials, and I came across this line:

"We reserve the right to exclusive control over the defense of a claim covered by this clause. If we use this right, you will help us in our defense."

This is regarding indemnity in the company's ability to relinquish all legal actions taken directly toward it in the event that someone using their platform is to be sued. Can anyone tell me specifically what these sentences mean -- especially the last one? I mean more particular to plain English.

This is not asking for legal advice -- it's asking for interpretation of a statement in legal terms.

  • What sort of the thing are the terms for? Was it an insurance contract, by any chance? – cpast May 6 '17 at 5:28
  • No, it's just legal terms for using a digital service platform, which I won't disclose here. – SeneJerry May 6 '17 at 5:32
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This is part of an indemnification clause.

Basically, the idea is that the service provider guarantees that if your business gets harmed because they let in an intruder, then they will absorb the losses if somebody sues you, as long as they have control of the court case and you cooperate with them in defending the court case.

So, for example, imagine you are using a web hosting service. Suppose there is a vulnerability in the hosting service computers, and a hacker is therefore able to break into your web site and steal your customer information. Your customer sues you for allowing their credit card to fall into the hands of a hacker. The web hosting service's insurance will pay the damages if the lawsuit succeeds, as long as you let their lawyers (ie the insurance company's lawyers) run the defense of the lawsuit and you cooperate with them.

The reason this language is there is because the "service provider" has an insurer that is guaranteeing them if they get hacked or something, then the insurer will cover any damages. The insurer requires them to make all their clients (like you) sign an indemnification agreement which includes the control clause.

  • You hit it on the nail. Well said. – ohwilleke May 7 '17 at 22:29

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