Indemnity claims can often be found in terms of delivery. Both supplier and purchaser may have a legitimate interest in being indemnified against any third-party claims, for example with regard to infringements of industrial property rights and resulting injunctive reliefs/claims for damages, as set out in the BGH judgment of 15 December 2010 - VIII ZR 86/09 = NJW-RR 2011, 479 f.: The purchaser has informed the supplier of an existing industrial property right – the supplier has nevertheless supplied door hinges, but has granted an indemnity claim in the event of infringements of industrial property rights. The owner of the industrial property right has brought an action against the purchaser and his authorised dealer for information, omission and damages. After this legal dispute ended without the involvement of the supplier, the BGH now ruled that the supplier would have been obliged to join the legal dispute and to defend the purchaser against the claims.

What does a "right to indemnification" legally mean and what consequences does it have?

According to prevailing jurisdiction (though almost always only the same 4 judgements are quoted, above all the decision of the BGH of 15. December 2010), the essence of a duty of indemnification existing on a legal or contractual basis is not only the satisfaction of justified claims, but also the obligation to defend against unfounded claims (BGH, judgement of 29.11.2013 - LwZR 8/12 with further evidence in: BGH, judgment of 15.12.2010 - NJW-RR 2011, 479 f.; BGH, judgment of 24.10.2002 - , NJW 2003, 352 f.; BGH, judgment of 19.01.1983 - IVa ZR 116/81, NJW 1983, 1729 f.; BGH, judgment of 24.06.1970 - VIII ZR 268/67, NJW 1970, 1594 f.). According to the purpose of the indemnification, the party to be indemnified should be relieved of the risk of either satisfying an unjustified claim or being sued for a justified claim (BGH, judgment of 19.04.2002 - V ZR 3/01, NJW 2002,2382). This view is also shared in the literature (instructive with a good overview: Schütt, NJW 2016, 980 ff.; Schweer/Todorow, NJW 2013, 2072 ff. and also: Rohlfing, MDR 2012, 257 ff.; Görmer, JuS 2009, 7 ff.; Zahn, ZfBR 2007, 627 ff.; Muthorst, AcP 2009, 209 ff.; Wellenhofer-Klein, in BB 1999, 1121 f.); even so if it is not explicitly mentioned in the wording of the indemnification (Palandt/Ellenberger, 75th edition 2016, § 157 marg. 12; Rohlfing, MDR 2012, 257, 258; Staudinger/Bittner, BGB 2014, § 257 marg. 22), because the person to be indemnified should be relieved of any risk of claims by third parties and should not be exposed to the risk of being sued for a justified claim or of having to meet an unjustified claim and being held liable for this as his own misconduct (BGH as above, NJW-RR 2011, 479, 480; NJW 2002, 238).

1. Defense

The defense can take place by each measure, which releases the indemnity creditor (indemnified) from the obligation to a third party and/or protects (BGH, Judgment of 11.04.1984 - VIII ZR 302/82, NJW 1984, 2151; MüKoBGB/Krüger, 7th edition 2016, § 257 marg. 4 ff.) them against a demand. According to the BGH (BGH as above, NJW-RR 2011, 479, 480), an exception to the duty to defend may exist if the situation deviates from the typical situation of interests and if a risk of legal claims by third parties to be borne by the indemnified should ultimately remain with him.

2. Requirement of fault and burden of proof

With regard to the fault requirement jurisdiction does not clearly express itself in all directions. Only with regard to a contractual release of the supplier from liability for defects of title did the BGH state that the supplier has an obligation to pay regardless of fault (BGH as above, NJW-RR 2011, 479, 480). Whether such no-fault liability should also apply in the reverse case, however, remains unclear. Yet, if one consequently understands indemnities as a contractual obligation to defend and keep free (as above), then it should not depend on a fault, if this is not mentioned as a condition within the scope of the obligation. At best for a secondary claim for damages due to unfulfilled indemnification (see below), fault could play a role.

Accordingly, the indemnified only has to explain and, if necessary, prove the assertion of the contractually determined third-party claim; in this case, it is already up to the indemnifier to examine the third-party claim and decide whether it should be fulfilled or rejected; to this end, the indemnified must provide the indemnifier with all documents and information that are relevant for his decision (Rohlfing, MDR 2012, 259; BGH as above, NJW 1983, 1729 1730).

3. Obligations oft he indemnifier

The indemnifier should first be obliged to begin negotiations with the third party regarding the existence and the amount of the claim asserted against the indemnified (BGH as above, NJW 2002, 2382; NJW 1983, 1729, 1730; Görmer, JuS 2009, 7, 9). In the event of a legal claim, the party indemnifier must probably participate in the legal dispute and "basically relieve" the indemnified of the dispute, otherwise he violates his obligation to indemnify (BGH as above, NJW-RR 2011, 479, 480; the debtor must at least provide lawyers or assume the costs - Rohlfing, MDR 2012, 258, 259). In some cases, the debtor is required to provide security in the event of a loss in court, for example by drawing up an enforceable deed (Schweer/Todorow, NJW 2013, 2072, 2076).

If the indemnifier does not release the indemnified from justified claims or does not defend against unjustified claims, jurisdiction (BGH, NJW-RR 2011, 479, 480; NJW 2002, 2382; NJW 1983, 1729, 1730) and literature (Palandt/Grüneberg, § 257 marg. 1; MüKoBGB/Krüger, § 257 marg. 12; Rohlfing, MDR 2012, 257, 259; Armbrüster, LM H. 9/2002 § 241 BGB Nr. 17; jurisPK-BGB/Toussaint, 7th edition. 2014, § 257 marg. 25) apply the general rules for damages according to §§ 280 I, 281 I 1, II BGB due to a contractual breach of duty (also with the fault requirement). The premise is that the indemnifier has been informed of the claim by a third party and that all information relating to the legal relationship has been made available to him. A breach of the obligation to indemnify shall then only be deemed to have occurred after expiry of a reasonable period, which has to be determined in the individual case. If the indemnifier has not fulfilled his duty of indemnification after expiry of the period, the indemnified can fulfil the third-party claim - irrespective of whether the claim is justified or not - and assert the payment or other performance made to the third party as damage incurred, without checking the validity of the claim in advance, and for any possible subsequent recourse proceedings the indemnifier is excluded with the plea that the indemnified has made a self-responsible decision which excludes the recourse claim or has not conducted an adequate process (BGHZ 190, 7, 26 = NJW 2011, 2719, 2724; BGH, NJW-RR 2011, 479, 480; NJW 2002, 2382; NJW 1970, 1594, 1595).

What is to be done?

Indemnification agreements are usually included as clauses in general terms and conditions (GTC). It should be specified as precisely as possible when the contractual partner – n.b. fault-based – is liable for which cases. The general, fault-free obligation to indemnify claims of third parties based on rights of third parties is probably invalid according to § 307 II No. 1, I 1 BGB in GTC (BGH, judgment of 05.10.2005 - VIII ZR 16/05 = BGHZ 164, 196).