What Is a Hold Harmless Agreement?
A hold harmless agreement is a clause in a legal contract absolving one party of legal liability for any injuries or damages suffered by another party. It ensures that one party cannot hold the other party legally responsible for any risks incurred from services provided.
A business may add a hold harmless agreement to a contract when the service being retained involves risks that the business does not want to be held responsible for legally or financially.
A hold harmless agreement is also known as a hold harmless clause or hold harmless provision. Alternatively, it is sometimes called an indemnity agreement.
- A hold harmless agreement is used to protect a party in a contract from liability for damages or losses.
- In signing such an agreement, the other party accepts responsibility for certain risks involved in contracting for the service.
- Hold harmless agreements are more common in business transactions involving dangerous sports, real estate, construction, and other areas where there's a higher risk of loss.
- A hold harmless agreement does not always protect against lawsuit or liability.
- These agreements can be disregarded if they are nebulous in language, overly broad in scope, or believed to be fraudulent.
How a Hold Harmless Agreement Works
Businesses that offer high-risk activities, such as skydiving sessions, commonly use a hold harmless clause. Although it is not an absolute protection from liability, it indicates that the customer has acknowledged certain risks and agreed to take them. This agreement may be in the form of a letter.
The hold harmless agreement may be unilateral or reciprocal. With a unilateral agreement, one party to the contract agrees not to hold the other party liable for injuries or damages incurred. With a reciprocal agreement, both parties to the contract agree to hold the other harmless.
The hold harmless agreement is not absolute protection against lawsuit or liability.
Examples of Hold Harmless Agreements
The hold harmless agreement is common in many less-obvious situations than a contract for skydiving lessons.
An apartment lease may have a hold harmless clause stating that the landlord is not responsible for any damage caused by the tenant. A homeowner hiring a roofer might request a hold harmless agreement to protect against a lawsuit if the roofer falls off the roof. A sports club may include a hold harmless agreement in its contract to prevent its members from suing if they are injured in the course of participating in tennis matches. In this example, there might be a clause requiring the participant to accept all risks associated with the activity, including the risk of death.
Contractors often add hold harmless agreements to their contracts to protect their businesses against potential liability arising from their work. For example, a contractor hired to add a deck to a private home may add a clause to preempt a lawsuit if an injury occurs on the deck at a later date. The homeowner, in turn, may use a hold harmless agreement to prevent a lawsuit if the contractor suffers an injury during the course of the work.
The first situation described above represents a unilateral hold harmless agreement. The contractor is the only one demanding to be held harmless. The second example represents a reciprocal agreement. The homeowner is also requesting indemnity from the contractor.
Limitations of a Hold Harmless Agreement
A hold harmless agreement does not always protect against lawsuit or liability. For example, hold harmless agreements that are nebulous in language or overly broad in scope might be disregarded. Moreover, the clause may be deemed null and void if signers present a strong case that they were coerced or beguiled into signing a hold harmless clause.
It's also worth bearing in mind that some states are less hold-harmless–agreement friendly than others. In some jurisdictions, there are anti-indemnity regulations limiting or even prohibiting the use of hold harmless clauses within certain professions or under some circumstances, such as residential tenancies.
What Is the Meaning of Hold Harmless?
Hold harmless essentially means just that: Don’t hold me responsible. It appears as an agreement in a contract and when signed should result in the party requesting it being freed from liability for damages or losses.
How Binding Is a Hold Harmless Agreement?
If the state where it is to be used recognizes these types of clauses and accepts them being used in that particular context, then they should be binding. That's not a guarantee, though. If the agreement is vague and difficult to understand, overly broad, or if it can be proved that it wasn’t signed with free will, it will likely be disregarded.
What Is Another Name for a Hold Harmless Agreement?
Hold harmless agreements go by many names. They may also be called hold harmless clauses, hold harmless provisions, or indemnity agreements.
The Bottom Line
Hold harmless agreements function as a type of insurance, preventing businesses or regular people from being held legally responsible for specified losses or damages for which they might otherwise be considered liable. They appear in legal contracts as a clause and must be understood before being signed.
Having such an agreement in place can be worth the legal expenses it costs to put in motion for businesses deemed to be more at risk of getting sued, such as contractors, providers of sports facilities, and landlords. However, these agreements are not always bulletproof. To be enforceable, these agreements need to be clear, put together with care, and recognized by the state where the activities take place.