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In a contract what is the difference between indemnify and defend? I often see them used together though I believe there is a subtle difference. If party x is to indemnify party y then x can't sue y. But if y gets in trouble then x will pay for the lawyers to defend y and that's what "defend". Do I understand correctly or what is the difference? A simple example illustrating the difference between indemnify and defend would be appreciated.

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Strictly speaking, if party X agrees to indemnify party Y for damage Z, then X is only agreeing to pay Y for realized damages Z.

Example: I agree to print something you wrote about about Acme. In exchange, you agree to indemnify and defend me against any defamation claims by Acme. Acme sues me for defamation.

  1. Since you agreed to defend me, you have to provide a legal defense against Acme's lawsuit. If you didn't agree to indemnify me, and Acme wins a judgment, you wouldn't be obligated to pay the judgment.

  2. If you only agreed to indemnify me, you could choose to let the lawsuit run its course without providing any legal defense. Indemnification only requires you to pay any judgment Acme might win.

  • The second instance creates a moral hazard for party X: it is in Y's interest to concede Z's claim, it may be in X's interest to defend it. This is why they usually go together. – Dale M May 15 '17 at 23:17
  • @DaleM - I think I could come up with a moral hazard scenario, but in general I don't see how it would be in Y's interest to concede a third-party claim. In the example given: With no defense I am adjudged a libeler, even though I don't have to pay the associated damages. I'm having trouble imagining people who have an interest in being so branded. – feetwet May 16 '17 at 0:02
  • possibly not for libel but being negligent is far less of a slur – Dale M May 16 '17 at 1:05
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    In practice, there are contractual agreements to "indemnify" only, and contractual agreements to "indemnify and defend", but almost never a contractual agreement to "defend" but not indemnify. But, the scope of the duty to "defend" when there is a duty to "indemnify and defend" is broader than the duty to indemnify (since the legal basis for alleged liability is usually less clear than the legal basis for actually imposing liability), so it isn't uncommon to "defend under a reservation of rights" to contest the duty to indemnify when a contract creates a duty to "indemnify and defend". – ohwilleke May 16 '17 at 2:48
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    @RobertColumbia: As ohwilleke also noted, I have only seen scenarios in which the party who has agreed to defend is also on the hook for damages, so Y has little practical claim on how X goes about the defense, unless X is doing such an unreasonable job (which would ultimately have to be established in a separate trial) as to imperil Y. – feetwet Jun 10 '17 at 22:56

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