Faux amis: indemnité and indemnity

A faux ami (a ‘false friend’ in English) is a word which looks or sounds similar to a word in another language but has a different meaning. I previously wrote about litigation faux amis here and about the words délai and delay here.

A common faux ami that I see when discussing contracts with French lawyers is the French word indemnité, which does not always mean the same as the English word indemnity.

Indemnité can usually be translated as compensation:

• Indemnité de licenciement = compensation for dismissal (not ‘dismissal indemnity’)

An indemnity in legal English usually refers to a specific type of contract provision where one party promises to reimburse losses suffered by the other party. Indemnities are often used in mergers and acquisitions contracts. Here is an example from a share purchase agreement (source: lawinsider.com):

• The Company shall indemnify, defend and hold the Investor and the Investor's directors, officers, employees, agents and affiliates harmless against any and all liabilities, loss, cost or damage, together with all reasonable costs and expenses related thereto (including legal and accounting fees and expenses), arising from, relating to, or connected with the untruth, inaccuracy or breach of any statements, representations, warranties or covenants of the Company contained herein or in any certificate provided by the Company pursuant to this Agreement.

It depends on the relevant law and the drafting of the particular contract clause but there is a perception that under an indemnity it is easier to recover losses and the amount of money recoverable is higher than under a claim for damages.