This week's contract lesson explains how to draft indemnification notice of claim provisions.

A notice of claim provision decides whether an indemnity is worth anything once a third party sues. It sets what triggers the indemnified party's duty to tell the indemnifying party about a claim, how many days it has to do that, what the notice has to include, and what happens when the notice arrives late. A condition precedent with a hard forfeiture can turn one late email into a lost indemnity, or into a fight about whether a court will enforce the forfeiture at all.

Emily Stedman and Brian Chang recently addressed these issues during our webinar on drafting indemnification procedures for notice, defense control, and settlement. The discussion focused on how the wording plays out in a real claim, with Emily speaking for the indemnifying party and Brian for the indemnified party.

To help you learn from these two How to Contract experts, we're sharing a PDF checklist with detailed advice on this topic and a video recording of their explanation.

Here's the three-page PDF checklist I created with my takeaways on indemnification notice of claim provisions. You can use this as a shortcut to remember what the trigger, the deadline, the contents, and the consequence of late notice each need to say.

Here's a link to watch this 14-minute segment featuring one of my favorite moments from the webinar, when Emily explained why a one-day-late forfeiture may not survive a trial judge who is thinking about fairness.

Emily said the more specific the provision, the better for both sides, because ambiguity works against both parties. She listed three things to settle. First, the trigger for the indemnified party's duty to give notice. It should not be so broad that a low-level employee with a hunch starts the clock, and it should be specific enough that the company can document that a real claim and a real risk exist. Second, the content of the notice, which at a high level is the who, what, when, where, why, and how. A complaint or a formal demand letter usually supplies that with a "see attached." Third, the timing, meaning the deadline after the trigger and the consequence of missing it. Emily also said to spell out who receives the notice, with a name, title, email, and mailing address, because in today's world things get lost.

Brian looked at the same clause from the indemnified party's side. A ten business day clock that starts on awareness of a claim does not match how a case starts. Under the Federal Rules of Civil Procedure a plaintiff has 90 days to serve, a defendant often hears about a filing first from a docket alert or from outside counsel, and Brian has seen cases where service never came and the case went away. He is not against a fixed period, but it should not force both parties to spend resources on the indemnity before service. He also cautioned that most commercial contracts have a general notices provision that may become the default mechanism for the indemnity notice, and that provision often names a procurement person, a salesperson, or a [email protected] inbox. Someone has to monitor that inbox and know to forward an indemnity notice to legal.