A lot of online services prompt users to accept conditions of use that have clauses for indemnification that look very much like there is chance that the users that pays for the service can possibly pay fees if third party causes damage just because it was in some "relation" or "in connection" to the user's use of the service. On the other hand most of these terms of use also include clauses that write that the indemnification clause will survive any termination.

So my question is, what is the scope of the indemnification clause:

  • Is it required that the service provider first prove that the user's use of the services is 'in connection' for the 3rd party suit against the service provider or he can just say because this user uses the service he is in connection to any suit that is against the service?
  • Also what happens if the service provider just suits himself by some 3rd party connected to the provider and decides to use this as a way to sue it's users?
  • Also what happens several years after the user stopped using the service. If this clause survives termination is the above problems permanent? If yes isn't using such online services (services which have both indemnification and clause that indemnification survives termination) risk that last lifetime and rises with every new service with similar terms that you ever use?

Example of indemnification clauses are:

You agree to indemnify and hold {service provider}, its officers, directors, employees, agents, subsidiaries and affiliates, harmless from any demands, loss, liability, claims or expenses (including attorneys’ fees), made against {service provider} by any third party due to or arising out of or in connection with your use of the Site.

or other variant:

You shall defend {service provider} against any claim, demand, suit or proceeding made or brought against {service provider} by a third-party alleging that Your Content, or Your use of the Service in violation of this Agreement, infringes or misappropriates the intellectual property rights of a third-party or violates applicable law, and shall indemnify {service provider} for any damages finally awarded against, and for reasonable attorney’s fees incurred by, {service provider} in connection with any such claim, demand, suit or proceeding; provided, that {service provider} (a) promptly gives You written notice of the claim, demand, suit or proceeding; (b) gives You sole control of the defense and settlement of the claim, demand, suit or proceeding (provided that You may not settle any claim, demand, suit or proceeding unless the settlement unconditionally releases {service provider} of all liability); and (c) provides to You all reasonable assistance, at Your expense.

For my questions I assume that the terms have also clause that the jurisdiction is state of USA. For simplicity lets assume that it is State of California like the following text:

K. Governing Law; Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the laws of the State of California, without reference to conflicts of laws principles. The parties agree that the federal and state courts in San Francisco County, California will have exclusive jurisdiction and venue under this Agreement, and the parties hereby agree to submit to such jurisdiction exclusively.

Also we may assume that the user have to click on agree button when he registers for the online service. Another assumptions is that the terms have this clause also:

L. Severability. If any provision, or portion thereof, of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal or unenforceable, such determination will not impair or affect the validity, legality, or enforceability of the remaining provisions of this Agreement, and each provision, or portion thereof, is hereby declared to be separate, severable, and distinct.

  • Where would a claim be brought? Which jurisdiction/country? This matters as browsewrap or clickwrap agreements have had varying reception in different areas. Could you please edit your question to add the relevant tag? – jimsug May 14 '16 at 14:33

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