Indemnities vs Warranties: What Every Artist Should Think About Before Signing

Credit : Sthepany Freitas

Indemnities vs Warranties: What Every Artist Should Think About Before Signing

Understanding the hidden risks in creative contracts

If you’re an artist or designer, you probably got into your work for the joy of creating, not for the thrill of reading contracts. Yet as soon as you start licensing your work to brands, publishers or galleries, the legal language arrives: warranties, indemnities, “hold harmless”, “all losses and expenses”. It can be tempting to skim, sign and move on, especially when an exciting opportunity lands in your inbox and you don’t want to look “difficult”.

Imagine this. A major fashion label emails to say you’ve been selected for a capsule collection. They send through a contract with the usual commercial terms – fee, usage, timelines – and then a dense paragraph that says you “warrant and indemnify” them against all claims arising from the artwork. You know your work is original. You’re thrilled. Part of you wants to sign immediately so production can start. But somewhere in the back of your mind, a question lingers: what am I actually promising here?

This is where the difference between a warranty and an indemnity becomes more than just legal jargon.

A warranty is, at heart, a promise about the facts. When you warrant that your artwork is your own original creation, you’re saying, “To the best of my knowledge, this is mine and I haven’t copied anyone.” If that turns out not to be true, you might be in breach of contract. The other party could potentially claim damages, but they still need to prove what loss they suffered and how it flows from your breach. In many everyday situations, that’s a relatively contained risk.

An indemnity, however, changes the landscape. When you indemnify a client, you are effectively saying, “If something goes wrong in this specific way, I’ll pick up the bill.” The clause will often talk about “all loss, damage, costs and expenses (including legal fees) arising out of any claim that the artwork infringes third-party rights”. That small block of text can move a large amount of risk from the brand onto you, sometimes even if the brand has contributed to the problem through how they use or modify your work.

To see how this plays out, picture another scenario. You design a pattern for that fashion label. Years later, another artist alleges that your pattern is too close to a series they posted online years before you drew yours. They sue the label, not you, because the label is the one selling the clothes. The label hires lawyers, defends the claim, then decides it’s cheaper to settle. If you’ve given a broad indemnity, the label might then come back to you and say: “Under this clause, you need to reimburse our legal fees and settlement payment.” Even if you have never seen the other artist’s work, the indemnity could still be triggered simply because a claim was made and money was spent dealing with it.

Or consider a children’s book where you license illustrations to a publisher. The contract says you indemnify the publisher for “any claims arising out of the artwork or its use”. The publisher later edits your image, adds some elements, and uses it on a series of products you never discussed. A third party complains that the combined image is too close to their character. Does your indemnity now extend to this adapted use? The answer depends on the exact wording, but you can see how easily the boundaries can blur.

These are not reasons to panic or to refuse every indemnity outright. In the commercial world, some form of assurance from the creator is normal and often reasonable. The more useful questions are about scope and proportion. Does the indemnity only cover claims that the original artwork itself infringes someone else’s rights, or is it drafted so broadly that it sweeps in every way the client might choose to use it? Is your liability capped in some way – for example, limited to the amount you’re being paid – or is it open-ended? Does the clause exclude situations where the client has changed the work, ignored your guidance, or used it far beyond what you agreed?

Another quiet issue is control. If a claim arises, does the contract require the client to tell you promptly and give you a say in how it is handled, or can they defend or settle the claim entirely on their own terms and then send you the bill? If you are indemnifying someone, you want to understand not only what you might pay for, but who gets to make the strategic decisions that affect that bill.

As you read your next contract, it can help to pause and ask yourself a few simple questions. Do I genuinely understand what this indemnity covers? Is the risk I’m taking on realistic for me as an individual artist or small studio? Does the fee reflect that level of risk, or am I being asked to carry exposure that’s wildly out of proportion to what I’m being paid? If something did go wrong – even if the chances feel tiny – could I cope with the financial consequences?

At this point many creatives wonder whether they can simply rely on general online advice. The difficulty is that indemnity and warranty clauses are intensely dependent on the exact wording and on how the rest of the agreement is structured. Two contracts can use almost identical phrases but, because of where they appear and what they link to, they work very differently in practice. That is why broad, one-size-fits-all answers can easily push you in the wrong direction.

When you’re dealing with a real opportunity – a collaboration with a recognisable brand, a book deal, a product line – it is usually worth having someone look at the actual contract and explain in plain language what it means for you. With that clarity, you can decide whether to sign as-is, ask for a narrower indemnity, or request a cap or other protections so that the legal risk and the commercial benefit sit in a fair balance.

If you are an artist, designer, illustrator or other creative and you are currently staring at an indemnity or warranty clause that makes you uneasy, our firm regularly helps creatives interpret, negotiate and document these arrangements. We can walk you through what the clause really does, what the practical implications are for your business and personal risk, and how to approach the conversation with the client. The goal is not to scare you away from great projects, but to help you say “yes” in an informed, confident way that protects both your reputation and your future.

Please note the above article is general in nature and does not constitute legal advice.

Please email us info@iplegal.com.au if you need legal advice about your brand or another legal matter in this area generally.