Indemnity Agreement (Australia)
INDEMNITY AGREEMENT
This Indemnity Agreement is entered into on [Agreement Date].
PARTIES
(1) [Indemnifier Name] [Indemnifier ABN/ACN], of [Indemnifier Street Address], [Indemnifier Suburb] [Indemnifier State] [Indemnifier Postcode] ("Indemnifier"); and
(2) [Indemnitee Name] [Indemnitee ABN/ACN], of [Indemnitee Street Address], [Indemnitee Suburb] [Indemnitee State] [Indemnitee Postcode] ("Indemnitee").
BACKGROUND
A. This Indemnity Agreement arises in connection with: [Indemnity Context].
B. The Indemnitee has agreed to permit, engage, or deal with the Indemnifier on the condition that the Indemnifier provides this indemnity.
C. The parties acknowledge that indemnity provisions in this Agreement are subject to the Civil Liability Act applicable in [Governing State] (in relation to proportionate liability) and to the Australian Consumer Law (Schedule 2 to the Competition and Consumer Act 2010 (Cth)) (in relation to consumer guarantees, to the extent applicable).
INDEMNITY
1. INDEMNITY
1.1 The Indemnifier indemnifies and agrees to keep indemnified, defend, and hold harmless the Indemnitee and its officers, directors, employees, agents, contractors, related bodies corporate, successors, and assigns (together, the "Indemnified Parties") from and against all losses, liabilities, damages, costs, expenses, claims, actions, proceedings, and demands of whatever nature ("Losses") suffered or incurred by any Indemnified Party arising out of or in connection with [Indemnity Context], to the extent caused by or attributable to:
(a) any act, omission, negligence, breach of contract, breach of statutory duty, wilful misconduct, or fraud of the Indemnifier or any of its officers, employees, agents, or subcontractors;
(b) any breach by the Indemnifier of any warranty, representation, or obligation in this Agreement or any related agreement;
(c) any personal injury or death arising from the Indemnifier's activities or omissions; or
(d) any infringement of any intellectual property rights, privacy rights, or statutory obligations caused by the Indemnifier's acts or omissions.
1.2 The indemnity in clause 1.1 does not apply to Losses to the extent that they are caused or contributed to by the negligence, breach of contract, or wilful misconduct of any Indemnified Party.
GENERAL
2. GENERAL
2.1 This Agreement is governed by the laws of [Governing State], Australia. Each Party submits to the non-exclusive jurisdiction of the courts of [Governing State].
2.2 This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior negotiations, representations, and agreements.
2.3 Any amendment must be in writing and signed by both Parties.
2.4 If any provision is invalid or unenforceable, the remaining provisions continue in full force.
2.5 Each Party acknowledges having had the opportunity to obtain independent legal advice before entering into this Agreement.
2.6 Nothing in this Agreement excludes, restricts, or modifies any right or remedy or any guarantee, warranty, or other term or condition implied by the Australian Consumer Law which cannot be excluded, restricted, or modified.
SIGNED by the parties:
INDEMNIFIER: [Indemnifier Name]
Signature: ___________________________
Name: ___________________________
Title (if company): ___________________________
Date: ___________________________
INDEMNITEE: [Indemnitee Name]
Signature: ___________________________
Name: ___________________________
Title (if company): ___________________________
Date: ___________________________
NOTE FOR COMPANIES: Execution under section 127 of the Corporations Act 2001 (Cth) by two directors, or a director and company secretary, creates a statutory presumption of proper execution.
Indemnifier
________________
Signature
Date: ________________
Indemnitee
________________
Signature
Date: ________________
What Is a Indemnity Agreement (Australia)?
An Indemnity Agreement in Australia commits a guarantor to meet another party's obligations if they default and defines the extent of that liability, enforceable under the Corporations Act 2001 (Cth).
The law of contractual indemnity in Australia is governed by the common law of contract, as interpreted by Australian courts. Key principles that apply to the construction of indemnity clauses include: indemnity clauses are construed strictly against the party seeking to rely on them (the indemnified party); clear and unambiguous language is required to extend an indemnity to cover the indemnified party's own negligence; and an indemnity will not be construed to cover losses that the parties did not contemplate at the time of contracting, unless the language of the indemnity is sufficiently broad.
Significant statutory constraints on indemnity agreements in Australia arise from the Australian Consumer Law (Schedule 2 to the Competition and Consumer Act 2010 (Cth)), which limits the ability to exclude liability for consumer guarantees (section 64), and from the Civil Liability Acts of each state and territory, which implement the proportionate liability regime for economic loss and property damage claims. These legislative constraints mean that the drafting of an effective indemnity agreement in Australia requires careful attention to both the scope of the indemnity and the applicable statutory framework.
A well-drafted indemnity agreement provides the Indemnitee with a valuable commercial protection — particularly in service agreements, construction contracts, access licences, and joint venture arrangements — by confirming that the Indemnifier bears the cost of risks that are properly attributable to its activities or omissions.
The legal framework governing the Indemnity Agreement (Australia) in Australia draws on several key statutes and regulatory bodies. Under the Corporations Act 2001 (Cth), the Australian Securities and Investments Commission (ASIC) regulates companies and financial services. Section 127 of the Corporations Act 2001 governs company execution of documents. The Australian Competition and Consumer Commission (ACCC) enforces the Competition and Consumer Act 2010 (Cth). The Australian Taxation Office (ATO) administers the Goods and Services Tax under the A New Tax System (Goods and Services Tax) Act 1999. The Federal Court of Australia and Supreme Courts of each state have jurisdiction over corporate disputes. Parties executing a Indemnity Agreement (Australia) in Australia should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Corporations Act 2001 (Cth) sets the foundational requirements.
When Do You Need a Indemnity Agreement (Australia)?
An Indemnity Agreement is appropriate whenever one party to a commercial relationship wishes to obtain a binding contractual commitment from the other party to bear specified risks and to compensate the first party for any losses arising from those risks.
Common situations where an Australian indemnity agreement is used include: service agreements and contractor arrangements — where the principal engages a service provider or contractor to perform services on or near its premises, and wishes to confirm that any personal injury, property damage, or third-party claims arising from the contractor's activities are borne by the contractor; access licences — where a property owner grants a third party (such as a contractor, licensee, or event organiser) access to its property, and wishes to be indemnified against any claims arising from that access; joint venture and partnership agreements — where one party performs a specific function (such as construction or project management) and the other party wishes to be indemnified against losses attributable to the first party's performance; supply agreements — where a manufacturer or supplier agrees to indemnify a retailer or distributor against product liability claims arising from defective goods; and shareholder and director agreements — where a company agrees to indemnify its directors and officers against claims arising from the performance of their duties, to the extent permitted by the Corporations Act 2001 (Cth).
An indemnity agreement should be considered whenever the risk of loss is asymmetric — that is, where the Indemnifier is in a better position than the Indemnitee to control, manage, or insure against the relevant risk. In such cases, indemnity is both economically efficient and commercially fair.
Parties in Australia should prepare a Indemnity Agreement (Australia) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under the Corporations Act 2001 (Cth), the Australian Securities and Investments Commission (ASIC) regulates companies and financial services. Section 127 of the Corporations Act 2001 governs company execution of documents. The Australian Competition and Consumer Commission (ACCC) enforces the Competition and Consumer Act 2010 (Cth). The Australian Taxation Office (ATO) administers the Goods and Services Tax under the A New Tax System (Goods and Services Tax) Act 1999. The Federal Court of Australia and Supreme Courts of each state have jurisdiction over corporate disputes. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.
What to Include in Your Indemnity Agreement (Australia)
A well-drafted Australian Indemnity Agreement must include several key provisions to be legally effective and practically useful.
The identification of the parties must be precise. For companies, the registered name, ABN, and ACN must be stated exactly as they appear on ASIC records. For individuals, the full legal name should be stated.
The scope of the indemnity — what types of losses, liabilities, and costs the indemnifier agrees to cover — is the most important substantive provision. The scope should be broad enough to cover the risks the Indemnitee faces but should also be anchored to the specific activity or relationship that gives rise to the indemnity. Australian courts will not extend an indemnity beyond what is clearly covered by its terms, so vague or overly general language should be avoided.
The carve-outs from the indemnity are equally important. Standard Australian drafting excludes from the scope of the indemnity any losses caused or contributed to by the Indemnitee's own negligence, breach of contract, or wilful misconduct. Without this carve-out, the indemnity may be void or unenforceable for being contrary to public policy.
The proportionate liability clause addresses the impact of the statutory proportionate liability regime (under the Civil Liability Acts) on the indemnifier's liability for economic loss claims. A well-drafted clause should specify whether the indemnifier is contracting out of proportionate liability (to assume full indemnity liability, including for other concurrent wrongdoers' shares) or whether the indemnifier's liability is limited to its own proportionate share.
The insurance requirement confirms that the Indemnifier has the financial capacity to meet its indemnity obligations. Requiring the Indemnifier to maintain public liability, professional indemnity, and workers' compensation insurance provides the Indemnitee with practical security for the indemnity.
The liability cap (if included) limits the Indemnifier's maximum exposure and is a common feature of commercial indemnity agreements in Australia. The cap must be clearly expressed and must comply with the restrictions on liability limitations under the ACL and Civil Liability Acts.
Additional compliance elements for a Indemnity Agreement (Australia) used in Australia include: Under the Corporations Act 2001 (Cth), the Australian Securities and Investments Commission (ASIC) regulates companies and financial services. Section 127 of the Corporations Act 2001 governs company execution of documents. The Australian Competition and Consumer Commission (ACCC) enforces the Competition and Consumer Act 2010 (Cth). The Australian Taxation Office (ATO) administers the Goods and Services Tax under the A New Tax System (Goods and Services Tax) Act 1999. The Federal Court of Australia and Supreme Courts of each state have jurisdiction over corporate disputes. Forms-legal.com provides this template as a starting point for Australia-compliant documentation.
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Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Indemnity Agreement (Australia) (Australia) [Legal document template]. Forms Legal. https://forms-legal.com/australia/business/contracts/indemnity-agreement-australia
"Indemnity Agreement (Australia) (Australia)." Forms Legal, 2026, https://forms-legal.com/australia/business/contracts/indemnity-agreement-australia.
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author = {{Forms Legal}},
title = {Indemnity Agreement (Australia) (Australia)},
year = {2026},
howpublished = {\url{https://forms-legal.com/australia/business/contracts/indemnity-agreement-australia}},
note = {Free legal document template. Based on Corporations Act 2001 (Cth)}
}Also available for these jurisdictions:
Frequently Asked Questions
The Australian Consumer Law (ACL), which forms Schedule 2 to the Competition and Consumer Act 2010 (Cth), significantly limits the ability of businesses to exclude or restrict liability through indemnity agreements in consumer transactions. Under section 64 of the ACL, any term of a contract (including an indemnity or exclusion clause) that purports to exclude, restrict, or modify a consumer guarantee is void to the extent that it does so. Consumer guarantees under the ACL include guarantees as to acceptable quality (s54), fitness for a particular purpose (s55), correspondence with description (s56), and repair or spare parts availability (s58), among others. However, section 64A of the ACL provides a partial exception for supplies of goods or services acquired for business purposes: the supplier may limit liability (but not exclude it entirely) to one of several remedies — such as repair, replacement, re-supply, or payment of the cost of having the services supplied again. This distinction is critical in practice: an indemnity agreement between a consumer and a business cannot exclude liability for defective goods or services that cause personal injury, but may limit liability to re-supply or repair costs if the supply was for a legitimate business purpose. Indemnity agreements between two businesses (with no consumer involvement) are generally not subject to the ACL consumer guarantee regime, though they may still be subject to the unfair contract terms regime under the ACL if one party is a small business (from November 2023) or if the terms are standard form.
Proportionate liability is a legislative regime that applies in all Australian states and territories under the Civil Liability Acts (such as the Civil Liability Act 2002 (NSW), the Wrongs Act 1958 (Vic), and their equivalents in other states), the Corporations Act 2001 (Cth), and the Australian Securities and Investments Commission Act 2001 (Cth). Under the proportionate liability regime, where multiple parties have caused the same economic loss or property damage through negligence (as concurrent wrongdoers), each wrongdoer is liable only for their proportionate share of the loss — not for the full amount of the loss. This means that a plaintiff cannot recover the full loss from one defendant even if that defendant is wealthy and solvent, while other defendants are insolvent. The proportionate liability regime has a significant impact on indemnity agreements. If a party agrees to indemnify another party against claims for economic loss or property damage, but the indemnifier is only one of several concurrent wrongdoers, the courts will apply proportionate liability to reduce the indemnifier's liability to its proportionate share — unless the indemnity agreement expressly provides that the indemnifier assumes full liability, including the proportionate share of all other concurrent wrongdoers. In most Australian states, the proportionate liability provisions can be contracted out of — that is, parties can agree by contract to restore joint and several liability for economic loss claims.
The ability of an indemnity agreement to cover fines and penalties in Australia is subject to important limitations as a matter of public policy. The general common law position in Australia is that a party cannot be indemnified against a penalty or fine imposed on them personally for their own wrongdoing — to permit this would be contrary to public policy because it would undermine the deterrent effect of the penalty. However, the position is more nuanced for corporate indemnities. Under section 199A of the Corporations Act 2001 (Cth), a company cannot indemnify a director or officer against a liability owed to the company itself, a pecuniary penalty imposed under a civil penalty provision of the Corporations Act, or a fine imposed under a criminal law provision. However, section 199A does not prohibit a company from indemnifying a director against liability to a third party (such as a damages award) or against the costs of defending a claim, unless the person is found guilty of a relevant criminal offence. For contractual indemnities between commercial parties (not involving directors' liability), Australian courts have generally upheld indemnities against fines and penalties imposed by regulatory bodies, provided the conduct giving rise to the fine was not intentionally dishonest or criminal. The safest approach in drafting is to include the regulatory fines and penalties in the scope of the indemnity with a carve-out for fines arising from the indemnifier's own fraud, intentional misconduct, or wilful breach of the law.
An indemnity agreement is only as valuable as the indemnifier's ability to pay claims made under it. Without adequate insurance coverage, a contractual indemnity may be of little practical value if the indemnifier cannot meet a large claim. For this reason, it is standard practice in Australian commercial contracts to require the indemnifying party to maintain specific types of insurance as a condition of the agreement. The types of insurance commonly required in conjunction with an indemnity agreement in Australia include: public liability insurance, which covers claims for personal injury or property damage caused to third parties — minimum limits typically range from $5 million to $20 million per occurrence for contractors and service providers; professional indemnity insurance, which covers claims for economic loss arising from the indemnifier's negligent professional advice or services — commonly required for consultants, engineers, architects, and IT service providers; product liability insurance, for indemnifiers who manufacture or supply products; workers' compensation insurance, which is compulsory in all Australian states and territories for employers; and management liability or directors' and officers' (D&O) insurance, for corporate indemnifiers. The indemnity agreement should require the indemnifier to produce certificates of currency on request, to notify the indemnitee of any cancellation or material change to the policies, and to maintain the required insurance for a specified period after the expiry of the underlying arrangement.
Yes, a liability cap in an indemnity agreement is generally enforceable under Australian law between commercial parties, provided the cap is clearly and specifically expressed. Australian courts will not readily construe a general limitation clause as applying to losses that the parties did not contemplate when the contract was made — the liability cap should clearly specify the types of loss it is intended to limit and the maximum dollar amount. Several important exceptions apply. First, a liability cap cannot limit liability for personal injury or death caused by the indemnifier's negligence or intentional misconduct, either under the ACL or the Civil Liability Acts (which generally prohibit exclusion of liability for personal injury in certain contexts). Second, the ACL prevents a liability cap from excluding liability for consumer guarantees in consumer transactions. Third, a liability cap may be unenforceable if it is so low as to effectively exclude all liability and amounts to a disguised exclusion clause — this is particularly relevant following the introduction of the unfair contract terms regime for small business contracts under the ACL. Fourth, the cap cannot limit liability arising from the indemnifier's fraud or dishonesty. The cap should be clearly distinguished from any agreed limit of liability under the main commercial contract, as the relationship between the two can create confusion if not expressly addressed.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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