An indemnity clause is a provision in a contract that outlines one party's obligation to compensate another for certain losses or damages. This clause is designed to protect one party from financial loss due to the actions or negligence of the other party. It often specifies the types of losses covered, such as legal fees or damages resulting from a lawsuit. These clauses are commonly found in various agreements, including leases, service contracts, and partnership agreements. By including an indemnity clause, parties can clarify their responsibilities and reduce the risk of disputes over liability in the event of unforeseen circumstances.