A hold harmless agreement shields one party from liability for damages caused by inherent risks in contracts. Common in high-risk industries, these clauses protect businesses, landlords, and contractors from legal claims.
By Brad Nakase, Attorney
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A hold harmless provision, hold harmless agreement, or simply hold harmless clause is a legal term that, when included in a contract, releases one party from any responsibility for harm that another party may experience. It safeguards against the possibility of one party suing the other for damages caused by risks associated with the services rendered.
In commercial negotiations, hold harmless provisions may be quite important. Agreements of this kind are common in fields where there is a substantial risk of harm, such as sports, real estate, and construction. An example of this would be a provision in a business lease agreement that prohibits the tenant from suing the landlord for damages caused by the landlord’s disregard for property maintenance.
Companies promoting skydiving or other dangerous activities often include a hold harmless provision in their contracts. The buyer has acknowledged and agreed to incur certain risks, even if a hold harmless provision does not provide total protection from responsibility. The participant is often required to sign a waiver or letter outlining the terms of the arrangement.
Both one-sided and two-sided hold harmless agreements are possible. In a unilateral agreement, just one of the contracting parties promises not to sue the other for any harm that may come to them. Each party to a contract in a reciprocal agreement promises to protect the other against legal action.
It is not always the case that a hold harmless provision shields a business from legal action. The signatory must make it clear in the agreement that they are giving up their right to sue due to negligence.
Skydiving and other extreme sports are not the only ones that might benefit from hold harmless agreements. Commonplace, everyday events also feature them.
In the event that a tenant causes damage to the landlord’s property, the landlord may be exempt from liability under a keep harmless provision in the apartment lease. In a similar vein, a homeowner who hires a roofer may ask for a hold harmless agreement to shield them from legal action in the event that the roofer slips and falls.
In the event that a member sustains an injury while exercising, the club or fitness facility may utilize this agreement to shield them from legal action. One such provision may state that the person must be willing to face the possibility of death along with any other dangers posed by the activity.
As a precaution against legal action stemming from their projects, contractors frequently include “hold harmless” clauses in their contracts. A contractor constructing a deck, for instance, may include a provision to forestall potential litigation arising from accidents sustained on the deck. In the event that the contractor sustains injuries while constructing the deck, the homeowner has the option to sign a hold harmless agreement to shield them from action.
This first case is an example of a one-sided hold harmless agreement. In this case, the only person who is requesting to be held harmless is the contractor. The second case shows a deal that works both ways. The homeowner has also requested indemnification from the contractor.
It is not always the case that a keep harmless agreement will shield you from legal action or responsibility. The precise wording and character of the agreement determine its efficacy. Hold harmless agreements, for instance, may be ignored if they include vague wording or are excessively general in scope.
Signatories may also be able to invalidate the keep harmless provision by demonstrating that they were victims of fraud or coercion when they signed the agreement.
When it comes to hold harmless agreements, some states aren’t as accommodating as others. Hold harmless provisions are seldom, if ever, allowed in some industries or in specific contexts (like residential tenancies) due to anti-indemnity legislation.
The term “hold harmless” refers to the fact that at least one of the parties involved in a contract is not held accountable or liable for any damages that may occur. It takes the form of a pre-service waiver or an agreement in a contract. A hold harmless provision, if signed, should release the party seeking its inclusion from responsibility for any harm, injury, or loss.
Hold harmless agreements should be legally binding if the state where they are used recognizes them and lets them be used in that situation. But there’s no assurance of that. The likelihood of a court disregarding an agreement increases if it is extremely general, difficult to understand, or if its signing was not voluntary.
Many terms describe hold harmless provisions. Indemnity agreements, hold harmless provisions, and hold harmless agreements are other names for this type of contract.
Alternative Liability Agreements
You could think of hold harmless agreements as being comparable to:
One party transfers the risk of damage to another in each of these agreements. Although these agreements achieve the same objective, they do so in various ways.
One way in which hold harmless agreements limit victims is by stating that they will keep the other party blameless in the event that they suffer injury as a result of a covered risk.
Indemnity agreements and other similar provisions allow the defendant to shift responsibility for any damages they incur onto another party. It is their legal right to sue the other party and demand payment in the event that a covered risk occurs.
The inclusion of clear contractual wording that transfers the risks of particular defined situations makes keep harmless agreements enforceable in California. By doing so, you are formally committing to indemnify in the contract.
The indemnitor or victim may be able to hold the indemnitee harmless for both passive and active negligence provided the wording is clear enough.
The term “active negligence” refers to the practice of “affirmative misconduct,” which indicates that someone must actually engage in a negligent activity.
Hold harmless agreements can nevertheless protect indemnitees against liability for passive negligence, even if they aren’t explicit enough to cover active negligence. A person is being passively negligent if they do nothing to meet their responsibility of care to another person.
The likelihood of enforcing the hold harmless agreement for damage that falls within its specified restrictions increases as the agreement’s specificity increases. Any restrictions imposed by the keep harmless agreement will be read in a way that penalizes the indemnitee.
It is possible to sue a separate party not included in the hold harmless agreement if you signed it and then incurred damages to your property or body.
One example is Susie’s desire to file a lawsuit against the rock climbing facility where she broke her leg, but the hold harmless agreement stops her from doing so. She finds out that the rock climbing wall’s grips were put in by an independent contractor. She instead sues them, saying that they put the holds up carelessly.
There are three common kinds of hold harmless agreements (sometimes called “covenants”):
A hold harmless agreement has several potential applications. Among the most prevalent are:
In most cases, they shield proprietors and service providers from having to pay for things like:
One party to a contract can transfer responsibility for injury to a third party to the other party through an indemnity agreement, as opposed to a hold harmless agreement, which prevents the victim from pursuing damages against the other party.
Consider Supermarket A, which has decided to have Door Inc. install automated sliding doors throughout the establishment. A condition in the installation agreement states that Door Inc. will indemnify Supermarket A in the event that any injuries are caused by the doors.
The doors later shatter, trapping Moe between them. Supermarket A is hit with a lawsuit from Moe, and it makes use of its indemnity rights to go after Door Inc. This establishes the door company’s contractual liability for any harm sustained by Moe.
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