MSA Redlines: Handling Standard Indemnity Carve-Outs

Indemnity clauses typically cover things like intellectual property infringement claims, data breach liability, and gross negligence, and buyer-side legal teams frequently push to carve out or cap certain categories, especially around data-related claims given how expensive a breach can be to remediate. Knowing which carve-outs are common industry practice versus which are a specific, unusual ask helps you and your legal team respond faster instead of treating every redline as a fresh negotiation.

A rep can and should understand the general shape of common redlines well enough to keep a conversation moving and set realistic expectations with the buyer. Actual contract language changes need your own legal counsel, every time, regardless of how many times you've seen a similar clause before. Confirm this boundary internally so a rep never promises specific legal language without review, which can create real liability.

A redline that bounces back and forth through sales as a messenger between two legal teams takes far longer than one where the lawyers get on a short call and work through their actual concerns together. Once a redline reaches a second round with no resolution, suggest a direct call between legal teams, and be upfront that this usually resolves things faster than another round of written comments.

Before you're in the middle of a live negotiation, confirm with your own legal team which indemnity terms are truly fixed versus which have some flexibility, and under what conditions. Reps who don't know this in advance either over-promise flexibility that doesn't exist, or unnecessarily push back on a term that legal would have actually approved changing.

Confirm these with your own legal team before a live negotiation:

• Which indemnity terms are fixed and which have some flexibility, and under what conditions that flexibility applies.
• Whether the buyer's request is common industry practice or an unusual ask that needs fresh analysis.
• Whether a pre-approved response already exists for carve-outs that repeat across deals, such as data-related claims.
• Whether your standard contract language has been revised recently, so last quarter's approved flexibility is not assumed.

If the same carve-out request comes up across multiple deals, work with legal to build a standard, pre-approved response rather than treating each occurrence as a brand-new negotiation. This shortens the redline cycle significantly for common requests and frees up your legal team's attention for the genuinely unusual ones that actually need fresh analysis.

Say a buyer's legal team requests an uncapped indemnity specifically for any claim related to data handling, citing the potential cost of a breach. This is a common, recognizable request, not an unusual one, so if your legal team has already decided their position on it in advance, the rep can set accurate expectations with the buyer immediately: "That's something we see fairly often, let me get our legal team's standard response to you by tomorrow," rather than promising nothing and going quiet for a week.

Without a pre-decided position, the same request instead triggers a slower, first-time internal debate about what to offer, while the buyer waits and starts to wonder whether the delay signals a problem with the deal itself. The redline content ends up identical either way in many cases. Only the speed, and the buyer's confidence during the wait, actually changes.

This is why a standard response playbook pays for itself even though it takes real upfront effort to build. It doesn't remove your legal team's judgment from anything genuinely new, it just stops recreating the same analysis from scratch every time a familiar, well-understood request comes back around.

Over several quarters, most companies find that a handful of carve-out categories account for the bulk of redline cycles. Once your legal team has a settled position on those handful, the remaining negotiation time goes toward the requests that genuinely need fresh thinking, rather than being spread thin across issues that were already resolved months earlier.