Indemnification for "bad acts" is not a defined legal term, but it is a useful shorthand for the way negligence, gross negligence, willful misconduct, fraud, and misrepresentation move around an indemnification provision and quietly change who pays when something breaks. The same word can sit inside the trigger, inside an exclusion, and inside a carve-out from the liability cap, and each placement produces different outcomes. That makes bad acts language some of the most dangerous boilerplate in commercial contracting.
Host Laura Frederick was joined by Jonathan Savar of The Savar Law Firm, an attorney with three decades of experience advising startups, emerging growth companies, and founders, and by Lindsay Sands, Vice President and Associate General Counsel at Vicinity Energy, a district energy company headquartered in Boston. Jonathan brought the perspective of counsel who has negotiated these provisions for vendors and clients in fast-moving deals. Lindsay brought the perspective of an in-house lawyer who sits on both sides of the table, sometimes as the vendor providing energy services and sometimes as the customer procuring goods and professional services.
The conversation pulled apart three sample indemnification provisions, walked through how the culpability levels (ordinary negligence, gross negligence, willful misconduct, fraud) interact with scope and exclusion language, examined how state statutory layers can override what the contract says, and made the case for negotiating indemnity, the cap, and insurance together rather than clause by clause.
Here are our top ten takeaways from the speakers' comments during the webinar:
"Bad acts" is a framework, not a legal term. Negligence, gross negligence, willful misconduct, fraud, and misrepresentation show up in different parts of the indemnification provision and do different work in each place. Reading them as a single concept misses where the leverage actually sits. The same word in the trigger, in an exclusion, and outside the cap can produce very different outcomes.
The culpability levels are the first lever. Ordinary negligence is the easiest to meet, gross negligence requires reckless disregard, and willful misconduct and fraud require intent. The indemnifying party wants the standard pushed up. The indemnified party wants it kept broad. Lindsay framed this as the cleanest starting point in any negotiation.
Scope and trigger language matter as much as the standard. "Arising from or relating to" is the broadest formulation. "To the extent of" is proportional. "Solely related to" is the tightest. The trigger word picks up almost as much risk as the culpability level itself, and the wrong word can swallow the rest of the provision.
Watch for inconsistent standards across actors. A grant that holds the named party to gross negligence but holds its employees, agents, and subcontractors to ordinary negligence creates an internal inconsistency that a judge or arbitrator will read against the drafter. If the standards are different on purpose, document why. If they are different by accident, line them up.
An exclusion as broad as the grant erases the grant. The second provision the panel reviewed showed this clearly. Excluding claims "arising from or contributed to by" the customer's negligence, the customer's gross negligence, and the negligence of the customer's employees or agents pulls most of the realistic coverage out. Read every exclusion against the grant and ask what is actually left.
"Breach of duty in performing the services" is a red flag. It is not standard language. It does not appear in most commercial contracts. And it looks like an attempt to recharacterize a contract breach as a tort, which has cap and insurance consequences. When you see it, ask what it is doing there and consider taking it out.
Bilateral indemnity rarely pays off. The "clever and cute" move of writing a bilateral indemnification clause to pick up extra coverage almost always backfires when a real claim arrives. Vague or unusual language confuses settlement analysis and often fails to deliver the protection the drafter thought they were getting. Push for clean, one-direction language wherever possible.
Negotiate indemnity, the cap, and insurance as a package. Bad acts often sit outside the limitation of liability, so the indemnification can swing total exposure dramatically. Loop the insurance team in early. Know what is covered, what the deductible looks like, and where the self-insured retention starts. A high deductible changes the negotiating posture on the indemnity itself.
State law sits underneath every bad acts provision. Some states will not enforce limitations on liability for willful misconduct or gross negligence. Anti-indemnity statutes in construction and professional services contexts override what the parties wrote. The contract language has to be read against the statutory regime, and the chosen-law state matters more than most lawyers act like it does.
Clear drafting beats clever drafting. Laura, Jonathan, and Lindsay all came back to this in different ways. Trying to game a specific state's law, hide a concession inside vague phrasing, or sneak in bilateral coverage usually creates problems later. Plain language ages better, settles better, and survives the changes (governing law amendments, assignments, regime shifts) that catch contracts over their lifecycle.
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