Hold harmless agreement | A comprehensive guide

Want to learn what is a hold harmless agreement is and how it works? In this post, we take a deep dive into hold harmless agreements with types & examples. Read on!

Hold harmless agreement

Hold harmless agreement is a legal contract stating that a company or a person will not be held liable in case of injury, risk, or damage caused to the other party. This agreement is a decision between two people or groups. It may either protect one party or both.

What is a hold harmless agreement?

Hold harmless agreements protect a business or a person from getting sued in case the other party suffers damages, financial losses, or physical injuries on the business premises or while using a service. Hold harmless meaning states that one party will not hold the other party liable for risk. The hold harmless agreement can either be unilateral (one-sided indemnification clause) agreements or it can be a reciprocal (mutual indemnity clause) agreement.

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Hold harmless clause example

A good hold harmless clause example is when a sports club prevents its members from suing in case of injury during the course of participating in any sport. In such a case, the hold harmless agreement will state that the signing party has accepted all kinds of risks associated with the activity, including the risk of death. The owner of the sports club or any of the staff involved will not be held responsible if the signing party suffers injuries during their participation in sports activities.

Indemnify and hold harmless

Indemnify clause or agreement is often used interchangeably with the hold harmless agreement or clause as they both help your business to reduce liability in case of accidents. While they both are practically the same, some experts suggest that “hold harmless” protects the party from both loss and liability whereas indemnify agreement only gives protection against losses. Indemnify and hold harmless are often seen together in the contract language.

Hold harmless vs indemnify

The difference between indemnify and hold harmless may vary from state to state. Many experts treat both indemnify and hold harmless agreements as to the same. The main difference is that “hold harmless” majorly protects a party against actual losses and potential losses while indemnification protects only against actual losses.

Sample indemnification clause

To the fullest extent permitted by law, the seller agrees to indemnify, defend and hold harmless the purchaser and his insurers, successors, representatives, attorneys and assigns from and against any and all expenses (including reasonable attorney’s fees), losses, costs, deficiencies, liabilities, and damages arising out of or due to

1. Breach of any of the representations, warranties or covenants of Seller contained in this Agreement
2. Default in the performance of any of the covenants or agreements made by Seller in this Agreement

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How does the hold harmless clause work

The hold harmless clause or agreement works as a release of liability that provides protection to one party from the damage or injury caused by the second party. Businesses who have a hold harmless agreement clause have more chances of escaping unnecessary lawsuits and saving their business reputation.

For example, if an independent contractor is working at your property, the contractor company might have you sign the hold harmless agreement to avoid being liable for any accidents that may occur due to the construction work. It means you can not sue the contractor in case of damages.

When to use waiver of liability

The most significant use of a waiver of liability for business users is to save themselves from damages claims and lawsuits associated with high-risk activities. Waiver of liability or hold harmless agreement is a protection cover that shields a company’s profitability along with its business reputation. These are also used to save a business from unnecessary legal disputes.

There are several situations where an individual or a party may require the need of having a waiver of liability in place. In the below section, we have tried to cover five such scenarios where a waiver of liability can be put to good use.

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Personal injury waiver

A personal injury waiver is used by businesses that offer high-risk activities. Waiver of liability is a legal contract that is used by parties to protect themselves and their businesses. It states that the provider is not to be held liable in case of personal injuries while using the owner’s facilities.

Contractor liability waiver

A contractor liability waiver is a legal contract that is used by contractors and subcontractors to release their clients from liabilities in the event of damages, injuries, accidents, or losses. This waiver of liability or hold harmless agreement sets clients free from any legal responsibilities and claims.

Homeowner liability waiver

A homeowner liability waiver is a legal contract where a homeowner agrees not to sue the party working on their premises in case of accidents, damages, and losses. Such kind of waiver of liability protects the working party from getting involved in legal complications.

Several liability clause

Under several liability clause, each person or party involved is responsible for their portion or obligations as specified in the agreement or based on the nature of their dealings. If one member of the party fails to meet its obligations the others will not be held liable.

Property liability waiver

The property liability waiver is used where the property owner is allowing other people or parties to use their facilities. The waiver of liability states that the owner is not to be held responsible in case of any injuries suffered during the use of the owner’s facilities or property.

Types of hold harmless agreements

There are a few basic types of hold harmless agreements, including:

• General: General hold harmless agreements protects a party from being held liable in specific situations that are clearly mentioned in the agreement description.
• Property Use: If an owner of the property rents their space to the other party, they will often ask the renting party to sign a hold harmless agreement to release themselves from any liability in case of accidents.
• Services: This type of hold harmless agreements come into the picture when a service is being provided to protect the offering party from any liability.

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What does the hold harmless provision include?

Hold harmless provision requires certain types of hold harmless clauses based on the extent of liabilities transferred. There are three most commonly used types of clauses:

• Broad form

When a Party A holds Party B harmless for suits against Party B based on sole negligence of either Party A or Party B, and joint negligence of both Party A and B.

• Intermediate form

When party A holds Party B harmless for suits against Party B based on sole negligence of Party A or joint negligence of both the parties.

• Limited form

When Party A holds Party B harmless for suits against Party B based on sole negligence of Party A.

Hold Harmless agreement for businesses

Hold harmless agreement for business is a legal contract that releases the business owner from any liability such as damage, injury, loss, etc. Business owners especially involved in high-risk activities must consider getting a hold harmless clause in place to protect their business and avoid lawsuits. Hold harmless agreement can save businesses from getting sued by a third party, or getting involved in expensive litigation. Business owners must ensure that they hold harmless agreement is specific, and clear so that it is accepted by the judge in the court of law.

Which types of business use hold harmless agreements?

There are several businesses that can make use of hold harmless agreements but it is often used in service industries where subcontractors come into the picture. The indemnification hold harmless clause is also highly useful when a service provider is offering a service with high risks involved.

Hold harmless agreement real estate

Hold harmless agreement in business of real estate means that the liability is removed from the seller and is passed on to the buyer. After transferring the responsibility to the buyer, a seller is free from any property claims or related issues that may arise.

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Contractor hold harmless agreement

Hold harmless agreement for business as a contractor can be highly beneficial. As a contractor who often hires subcontractors, a hold harmless agreement releases you from the liability for the injuries, losses, or work accidents caused during the contract period. It saves contractors from unnecessary claims.

Benefits of hold harmless agreements

There are several benefits of a hold harmless agreement for business:

1. Reduce the liability of the requesting party
2. Makes your business insurable
3. It leads to fewer lawsuits and legal battles
4. With fewer lawsuits, your business reputation will soar high
5. Helps you get more business opportunities

The sample hold harmless agreement

Let us take a look at a sample hold harmless agreement below:

Purchaser shall fully defend, indemnify, and hold harmless Seller from any and all claims, lawsuits, demands, causes of action, liability, loss, damage and/or injury, of any kind whatsoever, whether brought by an individual or other entity, or imposed by a court of law or by administrative action of any federal, state, or local governmental body or agency, arising out of, in any way whatsoever, any acts, omissions, negligence, or willful misconduct on the part of Purchaser, its officers, owners, personnel, employees, agents, contractors, invitees, or volunteers.

Hold harmless language

Generally, a hold harmless agreement will use a specific language. You can take the help of an attorney or a reviewer to help draft the specific language. Before finalizing your hold harmless agreement template be sure to verify the validity of your clause and contract language.

Each country has their own guidelines in terms of hold harmless language. Hold harmless indemnification clauses are often mentioned under broader clauses such as expenses, payment, liability, notices, jurisdiction, general provisions, etc. In terms of wording, each clause is almost similar.

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Information needed to make a hold harmless agreement

If you are planning to make a hold harmless agreement, here is what you would need:

1. The name and address of the party who will not be held liable in case of risk.
2. The name of the person or the party who will be providing protection.
3. The date upon which the hold harmless agreement will be signed and go into effect.
4. The name of the state whose laws will be governing.
5. The type of protection being provided under the hold harmless agreement.

Common questions on hold harmless agreement

In the below section, we have answered some of the common questions on hold harmless agreement for better clarity. If you are thinking of signing or getting signed a hold harmless agreement then these questions will help you gain more information about the entire process.

1. What does hold mean in real estate?

Putting a property on “hold” in real estate means that the house is still available but for several reasons, the agent or the house owner are unable to cooperate with showings for a short duration of time. A property on “hold” is still available for sale.

2. Can hold harmless agreements cause legal problems?

Hold harmless agreements are legal tools that most judges find acceptable. However, if your hold harmless agreement is improperly written or is in violation of public property, it will be rejected by the judge and expose you to legal problems.

3. Should I sign a hold harmless agreement?

While signing a hold harmless agreement, the signing party accepts the risks involved in the services they are availing and are agreeing to not sue the provider in case of any injuries, damages, or losses. You should sign a hold harmless agreement if you accept the risks involved.

4. Does a Hold Harmless Agreement stand up in court?

A Hold Harmless Agreement is a legally binding contract that states that one party cannot hold the other party accountable for the risk of physical or property damage. However, there are several rules and regulations one must follow in order for the agreement to stand up in court.