If someone sues Square because of something you did while using the service, you are responsible for covering Square's legal costs and any resulting damages. This also applies if someone else causes a problem using your account.
This analysis describes what Square's agreement states, permits, or reserves. It does not constitute a legal determination about enforceability. Regulatory applicability and practical outcomes may vary by jurisdiction, enforcement context, and individual circumstances. Read our methodology
The indemnification clause allocates financial and legal risk to users by making them responsible for defending and compensating Square against third-party claims related to user conduct. This establishes an operational framework where Square's liability exposure for user-related disputes is contractually transferred to the account holder.
Merchants agree to cover Square's legal defense costs and damages in a broad range of dispute scenarios, including situations involving third parties who use the merchant's account, which creates open-ended financial liability that could be significant depending on the nature of the claim.
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"You will indemnify, defend, and hold harmless Square and its officers, directors, employees, agents, and successors from and against any and all claims, damages, losses, costs, liabilities, and expenses (including reasonable attorneys' fees) relating to or arising out of your use of the Services, your violation of these terms, your violation of applicable law, or infringement of any third party's rights by you or any third party using your account.— Excerpt from Square's Square Terms of Service
REGULATORY LANDSCAPE: Broad indemnification clauses in commercial agreements are generally enforceable under California contract law, which governs this agreement, subject to public policy limitations. The FTC has scrutinized indemnification and liability-shifting provisions in consumer-facing agreements where they may operate as unfair or deceptive terms. The scope of indemnification extending to 'any third party using your account' is notably broad and may warrant specific legal review. GOVERNANCE EXPOSURE: Medium. The indemnification clause is common in payment processing agreements but the extension of liability to third parties using the account is an operationally significant detail, particularly for merchants who provide account access to employees, contractors, or integrated software platforms. JURISDICTION FLAGS: California Civil Code limitations on indemnification in certain contract types may apply depending on the nature of the merchant relationship. Merchants in jurisdictions with strong consumer protection frameworks should assess whether this clause is enforceable as written under local law. EU merchants may find that applicable law limits the enforceability of such broad indemnification provisions. CONTRACT AND VENDOR IMPLICATIONS: Merchants who integrate Square's API or provide account access to third-party software vendors should assess whether those vendors' agreements adequately address indemnification pass-through obligations. The clause could create a gap if a software partner causes a claim but the merchant bears Square's legal costs without a corresponding right of contribution from the software partner. COMPLIANCE CONSIDERATIONS: Legal teams should map all parties with access to the organization's Square account and assess whether existing contractual arrangements with those parties include indemnification provisions that align with the merchant's obligations to Square. Policy updates restricting unauthorized account access by third parties may help limit exposure under this clause.
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The indemnification clause allocates financial and legal risk to users by making them responsible for defending and compensating Square against third-party claims related to user conduct. This establishes an operational framework where Square's liability exposure for user-related disputes is contractually transferred to the account holder.
Merchants agree to cover Square's legal defense costs and damages in a broad range of dispute scenarios, including situations involving third parties who use the merchant's account, which creates open-ended financial liability that could be significant depending on the nature of the claim.
ConductAtlas has identified this type of provision across 9 platforms. See the full comparison.
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