Indemnification Clause
(Tipping Basket)

Summary

This indemnification clause template provides for indemnification by each of the seller and buyer for breaches of representations and warranties, covenants and other itemized occurrences. The indemnification is subject to a tipping basket: a threshold amount that must be reached for indemnification recover and after which the indemnified party may recover all amounts, including those comprising the basket. This clause includes practical guidance, drafting notes, and alternate and optional clauses. Indemnification may also be limited by a deductible basket where, once the threshold amount is reached, the indemnified party may recover only losses in excess of the deductible amount or a combination approach where once the threshold amount is reached, recovery begins from some other amount. For an example of these clauses, see Indemnification Clause (Deductible) and Indemnification Clause (Combination Basket), respectively. Indemnification may be subject to other limitations such as de minimis thresholds and caps, examples of which are included in an alternate clause in this template. Note that the numbering in this clause begins at Section . Typically the first section in an Indemnification Article will be the Survival Clause. These indemnification provisions are commonly followed with Sandbagging Clauses, as applicable. For further discussion of indemnification provisions, see Indemnification Provisions in Private Acquisition Agreements.