What is a Hold Harmless Clause
A hold harmless clause is a statement in a legal contract stating that an individual or organization is not liable for any injuries or damages caused to the individual signing the contract. An entity may ask an individual to sign a hold harmless agreement when the individual is undertaking an activity that involves risk for which the enabling entity does not want to be legally or financially responsible. This clause is also known as hold harmless provision.
BREAKING DOWN Hold Harmless Clause
The most common uses of hold harmless clauses occur in real estate and construction. Additionally, businesses engaged in high-risk activities, such as skydiving and certain sports clubs, also make frequent use of such clauses.
A hold harmless clause may be unilateral or reciprocal. With a unilateral clause, only one party to the contract agrees not to hold the other party liable for injuries or damages incurred. With a reciprocal clause, both parties to the contract agree to hold the other harmless.
Hold Harmless Clause Examples
For example, a sports club may include a hold harmless clause in its contract to prevent its members from suing if they are injured in the course of participating in a tennis match. In this example, the hold harmless clause asks the participant to accept all risks associated with the activity, including the risks of injury or death.
Contractors often require hold harmless agreements to protect against potential liability arising from their work. For example, a contractor adding a deck to a private residence may add the clause to preempt a lawsuit if an injury occurs on the deck at a later date. Likewise, the homeowner may request a hold harmless clause to prevent a lawsuit if the contractor, during the course of his work, suffers an injury on the homeowner's property.
The first situation described above represents a unilateral hold harmless clause; only the contractor is requiring that the homeowner hold him harmless. The second example represents a reciprocal clause; the homeowner is also requesting indemnity from the contractor.
Hold Harmless Clause Validity
A hold harmless clause is not always an absolute protection against lawsuit or liability. Some states do not honor hold harmless agreements that are nebulous in language or overly broad in scope. Moreover, if one party presents a strong case that an entity coerced or beguiled him into signing a hold harmless clause against his will, the clause can be deemed null and void. In some states, the use of hold harmless clauses is prohibited in certain construction jobs.