Non-indemnifiable

Term Main definition
Non-indemnifiable

The law does not honor all indemnities, and a promise of indemnification against one's own knowing or intentional wrongdoing is treated as unenforceable. Under state law, indemnification of officers of a company is restricted and in some cases limited or prohibited.

A knowing or intentional wrongdoing by the indemnitee is not covered by the indemnitor's promise in an indemnification agreement, and neither may a company indemnify an officer for knowing or intentional wrongdoing by the officer. Indemnitees cannot enforce indemnity promises that are against public policy. The law cannot encourage contracts where either party has illegal purposes, like avoiding the effects of intentional wrongdoing. Indemnifying persons from their own wrongdoing could encourage wrongdoing and violates public policy.

Accordingly, depending upon in which state one's company was formed, the corporations law or limited liability company law or other law, as the case may be, places similar limits upon indemnification by state chartered companies. Since intentional wrongdoing is unindemnifiable as against public policy, if an officer of one of those companies is found liable to the respective company or its shareholders, then no indemnification is generally allowed unless a court decides the matter in favor of the officer and finds the officer acted in good faith.   

Synonyms: nonindemnifiable, unindemnifiable