Risk and liability
Indemnity
A promise to cover the other party's losses, legal fees, or claims arising from your work. In a contract with no liability cap, indemnity is where unlimited risk lives.
What it means
An indemnity clause is a promise by one party to compensate the other for certain kinds of losses, claims, or legal costs. In a freelance or creator contract, the indemnity almost always runs in one direction: the freelancer indemnifies the client.
The clause typically covers things like: a third party claiming the delivered work infringes their copyright, a regulator investigating a claim in the work, or a lawsuit brought by anyone who says the work harmed them.
Why it matters
Indemnity by itself is not the problem. The problem is indemnity without a cap. A contract that says "Contractor shall indemnify Client from any and all claims" and separately has no liability cap can, on paper, make a $2,000 project carry unlimited legal exposure.
If a client's downstream customer sues the client over the deliverable, the client points at the freelancer, and the freelancer's own assets are in scope. That is the quiet math inside a lot of routine-looking contracts.
What fair looks like
- Indemnity is capped at a defined amount, often the fees paid under the contract, or a small multiple of them.
- Indemnity excludes claims caused by the client's own instructions, materials the client supplied, or the client's changes to the deliverable after acceptance.
- Consequential and indirect damages are carved out: no liability for lost profits, lost data, or reputational harm downstream.
Related reading
For the full explanation with sample language, see the blog post on uncapped liability in freelance contracts.