Mutual Indemnity and Waiver of Claims Clause
(Commercial Lease) (Pro-Tenant)

Summary

This mutual indemnity and waiver of claims clause may be included in a commercial lease to allocate the risk of claims for injury or damage related to the leased premises and common areas. This clause contains practical guidance, drafting notes, and optional clauses. Indemnity provisions in commercial leases require one party to indemnify (and often defend) the other party against certain losses or claims for property damage or personal injury. These clauses are used to allocate the risk between the landlord and the tenant based on which party is best suited to control and limit that risk. Commercial leases nearly always contain clauses whereby the tenant agrees to indemnify the landlord because the tenant is in possession and control of the leased premises, and the landlord requires protection from third-party claims that may be asserted simply because it is the owner of the property. In contrast, a commercial landlord often resists indemnifying the tenant, and, typically, the tenant must have relatively strong negotiating power to require the landlord to provide a mutual indemnification. Indemnification clauses in commercial leases should always be drafted with insurance considerations in mind. Ideally, each party should carry insurance coverage that meshes with their responsibilities under the indemnity. If the parties do not carry adequate coverage for the risks assumed in the indemnity clause, the indemnity will not work as intended and the indemnified party might find itself in the position of having to defend and possibly pay a claim if the indemnitor is underinsured, bankrupt, or otherwise not financially sound. This clause also includes a mutual waiver of claims. Waiver or release clauses (also called "hold harmless" clauses) are used to address claims between the landlord and the tenant. Each party waives claims in its favor and against the other party to the extent the loss is covered by its insurance. This clause is drafted from the tenant's perspective but includes drafting notes and optional clauses from the landlord's perspective. The clause is non-jurisdictional and local counsel should be consulted to ensure compliance with local law. For a full listing of key content covering office leasing, see Office Leasing Resource Kit. For a full listing of key content covering retail leasing, see Retail Leasing Resource Kit. For more information on the use of indemnification clauses in leases, see Indemnity and Other Risk Allocation Mechanisms in Commercial Leases, Office Lease Agreements and Retail Lease Agreements. See Office Lease Agreement and Retail Lease Agreement (Long Form) for examples of indemnity clauses in commercial leases