Cities and public entities across Oklahoma should carefully review their contracts for indemnity and “hold harmless” provisions. Under Oklahoma law and Attorney General guidance, municipalities generally cannot agree to indemnify or assume liability for third parties.

Indemnity clauses are common in vendor agreements, service contracts, leases, and software licenses. These provisions often require a city to “hold harmless,” “defend,” or “indemnify” a private party against claims, damages, or lawsuits. While they may appear routine, they can create significant legal and financial risks.

The Oklahoma Attorney General has made clear that public entities may not enter into contracts that shift liability from a vendor to the government, including clauses that require the city to indemnify a private party or assume responsibility for damages caused by the vendor’s negligence.

These clauses are problematic because they create a contingent and potentially unlimited financial obligation, a form of debt that cannot be determined or funded at the time the contract is executed. As a result, such provisions are generally unconstitutional.

Oklahoma law also provides that agreements to indemnify someone for unlawful acts are void.

What Does an Indemnification Clause Look Like?

“City agrees to indemnify, defend, and hold harmless Vendor from any and all claims, damages, and expenses arising out of Vendor’s performance, including those caused by Vendor’s negligence.”

This type of clause requires the City to pay for damages, defend the vendor, and assume potentially unlimited liability, making it impermissible in most cases.

What This Means for Cities

Cities should not agree to:

Indemnify or hold harmless a vendor or third party
Assume responsibility for another party’s negligence
Accept terms requiring the city to defend a vendor

Action Steps

Review all contracts, including renewals and software agreements
Identify indemnity and hold harmless language
Consult with your city attorney before signing any agreement containing these provisions
Negotiate removal or revision of non-compliant clauses

Bottom Line

Indemnification provisions may be common in private contracts, but they are generally not permissible for Oklahoma municipalities. Careful contract review, and consultation with your city attorney, is essential to avoid unintended and unlawful financial obligations.