What is a Hold Harmless Agreement?
How do you legally define it?
What are the essential elements you should know!
In this article, we will break down the legal definition of Hold Harmless Agreement so you know all there is to know about it!
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What Is A Hold Harmless Agreement
A hold harmless agreement (also called a release of liability agreement) is a legally binding agreement between contracting parties where they legally waive or limit their responsibility in regards to possible damages or injuries.
This type of agreement is quite common in commercial contracts, business transactions, and high-risk activities.
For example, in construction, you may often see a contractor hold harmless agreement or a subcontractor hold harmless agreement where the contractor (or subcontractor) attempts to limit or have liability waived.
A hold harmless agreement is not a document allowing a party to legally waive or limit responsibility in all situations.
It’s important to keep in mind that the local laws and each jurisdiction will define scenarios where a person or entity cannot legally waive liability or responsibility for certain things.
For example, in some jurisdictions, you cannot waive responsibility for bodily injuries in specific situations or due to negligence.
As a result, the hold harmless contract will not fully operate as a legal discharge “fully” protecting a contracting party.
What is the legal definition of a hold harmless agreement?
A hold harmless agreement (or harmless agreement) is a legally binding agreement stating that one party will not hold the other party responsible (or liable) for the risk of physical or property damage.
In essence, the hold harmless agreement definition can be summed up as follows:
- It’s a contract
- It is legally binding
- A party waives liability
- Relates to a certain activity
What information is contained in a generic hold harmless agreement?
Generic agreements will typically contain the following information:
- The identification of the parties
- Who is held harmless
- Who is waiving liability
- What is the scope of the waiver or release
- Description of the transaction or project
- Timeframe for the protection
- Agreement effective date
- Signature date
- Signature block
A hold harmless agreement can be called in many different ways.
From a legal standpoint, the title of the document is not necessarily relevant.
What’s important is the substance of the agreement.
Here are the different names or titles you may see when dealing with an agreement of type “hold harmless”:
- Hold harmless contract
- Hold harmless letter
- Hold harmless waiver
- Release of liability
- Waiver letter
- Holds harmless agreement
- Held harmless agreement
No matter what the document is called, if the substance of what you are signing is to waive another party’s liability for a certain activity or project, then you are signing a hold harmless contract.
A “release”, “waiver”, or “hold harmless” are terms that may be used interchangeably and may mean the same thing.
There are many types of hold harmless agreements.
You can have a unilateral hold harmless agreement or a bilateral one.
A unilateral hold harmless contract is one where one party waives liability in favor of the other.
On the other hand, a bilateral hold harmless provision is one where each party will waive liability in favor of one another in regards to a certain activity.
Hold harmless agreements can also be classified based on their scope such as “general hold harmless agreement” or “special hold harmless agreement”.
A general one will have a broad scope where the objective is to waive liability for a large spectrum of activities or events.
A special agreement will tend to have a more narrow scope and targets a specific activity or project.
When To Use It
You’d be surprised to find out that a hold-harmless agreement is used quite often in many facets of our lives.
You may be asked to sign a standard hold harmless agreement in situations like:
- Renting a property
- Hiring the services of a contractor
- Hiring the services of a subcontractor
- In high-risk physical activities or sports
- When hosting an event
- When engaging in a risky commercial project
Whether you are signing a contractor hold harmless agreement or one to waive responsibility for a high-risk activity, fundamentally, the objective is for one party (or all) to limit legal liability.
You can be using this agreement for different activities and in different industries:
- Real estate
- Venue rentals
- Service providers
Hold Harmless And “Indemnification”
Sometimes you see an agreement titled “indemnification and hold harmless agreement” or “hold-harmless (indemnity) agreement”.
What does that mean?
Essentially, this agreement has two fundamental legal provisions:
- Hold harmless agreement
- Indemnification agreement
The “hold harmless” agreement serves as a “waiver” of responsibility.
On the other hand, the “indemnification clause” allows a party to seek “compensation” and get indemnified for any possible damages.
The combination of a hold harmless and indemnification is like saying “you acknowledge that I’m not responsible for this and if I suffer any damages for what you are doing, I will ask you to cover my loss”.
There are three basic types of hold harmless agreements with indemnification obligations:
- Limited form
- Intermediate form
- Broad form
The limited form is one where a party will be held responsible or liable for damages based on a party’s fault percentage.
For instance, a subcontractor will be held responsible for what under his or her responsibility in a larger construction project.
The intermediate form is when a party assumes liability for all accidents and negligence.
In an intermediate form, the fault of the party is not necessarily relevant.
What’s important is that a party will be liable for any event that was under the overall responsibility of that party.
The broad form liability is when a party takes responsibility for all liability events resulting from his or her actions, the actions under his or her overall responsibility, and that of others relating to the activity.
Since this type of indemnification is so broad, some jurisdictions prohibit them.
Hold Harmless Clause
A “hold harmless clause” is a contractual provision whereby a party absolves legal liability for a specific purpose or in general for possible damages or injuries.
It’s quite common to see a hold harmless clause in business contracts or commercial dealings.
For example, if you decide to go parachuting, the service provider will require that you sign an indemnification hold harmless agreement or a document containing a waiver of liability and hold harmless agreement absolving it for any possible injuries.
The hold harmless clause is also referred to as a hold harmless provision or simply “hold harmless” or “waiver” in business lingo.
Hold harmless agreements are generally valid and enforceable in court.
However, the state laws or the laws applicable to a lawsuit or injury may impact the validity of the hold harmless provision.
Some states recognize hold harmless agreements whereas others will limit them.
The rule of thumb is that if the harmless agreement or waiver goes against public policy or the public interest, then it may not be valid.
For example, when you purchase an airline ticket, you are agreement to waive the airline’s responsibility for any accident or other injuries.
However, the courts will not necessarily enforce that as this may violate public interest.
Also, hold harmless agreements will be difficult to enforce by a party who was negligent.
In other words, a negligent party cannot escape liability by invoking a hold harmless contract.
So what is the legal definition of Hold Harmless Agreement?
Many wonder, should I sign a hold harmless agreement?
Let’s look at a summary of our findings.
Hold Harmless Agreement:
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