Contractual indemnification provisions provide an incentive to contract that often serves the interests of both parties.  As a result, they are commonplace in all manner of commercial agreements.  When parties to an agreement containing an indemnification provision find themselves at odds in a litigation, however, the alignment of interest fractures.  If the indemnification provision is silent as to intra-party actions or claims, a question arises as to how courts will ultimately interpret the agreement.  (We note that courts and practitioners utilize “intra-party” and “inter-party” interchangeably to refer to disputes between the contracting parties.  In this article, we utilize the term “intra-party” only.)  This article identifies the factors that courts consider when determining whether an indemnification provision extends to intra-party disputes.

Bright-Line Rule in Hooper 

In New York, Hooper Assoc. v AGS Computers, 74 NY2d 487 [1989], is the seminal case on whether an indemnification provision extends to actions between the contracting parties.  In Hooper, plaintiff sought indemnification from defendant under the parties’ agreement after plaintiff prevailed on a breach of contract action for the purchase of computer equipment and services. Id. at 489-90.  The court was asked to determine whether defendant had agreed to intra-party indemnification when it had agreed to indemnify and hold harmless [plaintiff] *** from any and all claims, damages, liabilities, costs and expenses, including reasonable counsel fees arising of breach of warranty claims, the performance of any service to be performed, the installation, operation and maintenance of the computer system, infringement of patents, copyrights or trademarks and the like …. Id. at 492 (alteration in original) (quoting the language of the agreement).  The trial court found the contract to be “clear and unambiguous in its terms and in providing for indemnification of all claims, including reasonable attorney’s fees, by defendant to plaintiff.”  Hooper Assoc. v. AGS Computers, No. 04657/81, 1988 WL 1533033, at *1 [Sup Ct, NY County June 23, 1988].  The Appellate Division, First Department affirmed.  Hooper Assoc. v AGS Computers, 146 AD2d 465 [1st Dept 1989].