A specific indemnity is an indemnity given for a particular identified risk that came up in due diligence, rather than as part of the general warranty package. If the risk crystallises after completion, the seller reimburses the buyer on the terms set out in the indemnity.
Technically, it is a tailored contractual indemnity drafted around a single identified matter (an active dispute, a known tax exposure, an environmental contamination notice, a non-compliance issue) and operating outside the general warranty regime in respect of that matter.
A specific indemnity is the buyer’s way of converting a known diligence finding into a residual exposure that stays with the seller after completion. The seller’s job is to confine it to the actual identified matter and stop it expanding into a general backstop for anything adjacent.
The mechanics matter as much as the drafting. The trigger language (what event activates the indemnity), the conduct clause (who runs the defence and on what conditions), the cap and sunset, and the buyer’s mitigation obligations all shape whether the indemnity covers the risk that was actually identified or expands into something larger. Specific indemnities typically operate dollar-for-dollar without a basket, deductible, or knowledge qualifier, which is why their scope must be drawn precisely.
What you as a seller should push back on: indemnities drafted to capture losses beyond the specifically identified matter, absence of a conduct clause giving the seller meaningful control over the defence of indemnified claims, absence of a sunset, absence of mitigation obligations on the buyer, and indemnities given for risks that are in fact already covered by warranties.