Notice of Claim Language in Indemnification Provisions

Understanding Claim Notice Language in Indemnification Provisions

I want to talk about the claim notice language in an indemnification provision. The indemnification process kicks off with a notice. The indemnified party notifies the indemnifying party about a covered claim. If the indemnifying party controls the defense, it takes over at this point.

There are two ways to approach the notice language.

Covenant vs. Condition Precedent: Key Differences

1. Covenant (favors the indemnified party)

One option is to write the notice provision as a covenant. It's a simple obligation like most other provisions. If the indemnified party does not provide the required notice, it is a breach. But that breach may not be material and may be subject to cure.

A typical covenant would say, "The indemnified party will notify the indemnifying party promptly after it receives notice of the claim."

2. Condition precedent (favors the indemnifying party)

With the second option, we write the notice as a condition precedent. That the obligation to defend arises ONLY AFTER the indemnified party provides the notice as required.

This provision would say, "If the indemnified party promptly notifies the indemnifying party after receiving the claim. the indemnifying party shall defend..."