What is Indemnification Cap?
Definition
The maximum dollar amount the seller has to pay for breaches of reps and warranties. Typical SMB deal range: 10% to 25% of purchase price for general reps; 100% (or uncapped) for fundamental reps and fraud. A cap that does not carve out fundamental reps and fraud is dangerously low.
Frequently asked questions
What is Indemnification Cap?
The maximum dollar amount the seller has to pay for breaches of reps and warranties. Typical SMB deal range: 10% to 25% of purchase price for general reps; 100% (or uncapped) for fundamental reps and fraud. A cap that does not carve out fundamental reps and fraud is dangerously low.
Why does indemnification cap matter in a contract?
Risk level: High. The cap level matters less than what is excluded from it. Inkvex flags indemnification cap clauses during analysis, explains the risk in plain English, and suggests negotiation language to protect your interests.
How does Inkvex analyze indemnification cap clauses?
Inkvex scans your contract for indemnification cap-related clauses, flags risks in plain English, quotes the exact language from your document, and cites jurisdiction-specific laws that may affect enforceability. Upload any contract at inkvex.app for a free analysis.
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