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What Is a Hold Harmless Agreement?
A hold harmless agreement is a legal agreement between parties that states that one party will not hold the other liable for risk. Hold harmless agreements typically apply to physical damage or risk. These agreements can either be one-way (known as unilateral) agreements, or they can be mutual (known as reciprocal) agreements. You can sign a hold harmless agreement either before or after the activity covered occurs.
Other names for a hold harmless agreement include:
- Hold harmless
- Hold harmless clause
- Hold harmless letter
- Hold harmless release
- Indemnity agreement
- Release of liability
- Waiver of liability
When Should You Use a Hold Harmless Agreement?
Businesses that provide high-risk activities (skydiving sessions, for example) frequently use hold harmless agreements. Though these agreements do not offer absolute liability protection, they do indicate that a customer acknowledges certain risks and agrees to take these risks. Hold harmless agreements are also used often in the construction industry.
However, even if you don't operate a high-risk business, there are plenty of reasons why you might choose to use a hold harmless agreement. Common examples include:
- You are hiring a service and want to protect yourself from liability should someone suffer an injury while they are performing those services.
- You are hosting an event and want legal protection if a participant gets injured during the event.
- You are renting out or allowing someone else to use your property and want to protect yourself from liability if an incident takes place on your property.
- You plan to participate in a dangerous activity, and you agree that you won't hold anybody else liable for actions you take.
- You own a business or sports agency that involves customers or participants engaged in physical activities that involve risks (like sports) and want to protect your business.
- An injury or other incident occurred during an event you sponsored or on your property, and the person involved has agreed they will not hold you or the business you own liable.
Here's an example of a common scenario when people may choose to use a hold harmless agreement. You decide you want to hire someone who will do remodeling work on your property. You don't want to be held liable should the workers hurt themselves while on property you own, so you ask them to sign a hold harmless agreement to ensure you're protected if an incident does occur.
At the same time, the contractors also want protection while doing their job on your property. They may, in turn, ask you to sign a hold harmless agreement so they are not held liable if someone wanders into the construction site and gets hurt.
What Information Should a Hold Harmless Agreement Include?
Any hold harmless agreement should include a few key provisions, including:
- The party that will be held harmless or protected, including their contact information and address
- The other party to the agreement, including their contact information and address
- The date of the agreement
- Details of the location and who will be holding the event or activity
- Details about the event or activity itself covered by the agreement (for example, construction, horseback riding, etc.)
- Date the agreement should take effect and how long it will last
- Signatures of all parties and the date the agreement is signed
Types of Hold Harmless Agreements
A few basic types of hold harmless agreements exist, including:
- General: General hold harmless agreements are created to protect a given party from liability during a specific event or occurrence that the agreement describes. The document will need to describe the event being protected. For instance, you're hosting a festival on the site of your business, and anyone using the trampoline will hold you and your business harmless for liability arising out of that use.
- Property Use: If a venue owner or another property owner rents space, they will often ask the party renting the space to sign a hold harmless agreement or a similar agreement to provide a release of liability. The property owner is then relieved of liability if someone is injured on the property. Property owners renting out space for an event may also require the renter to obtain event insurance. Here is an article about renting out your property.
- Services: These hold harmless agreements offer protection from something that occurs while someone is providing a service. Again, the document will need to describe the services included in the agreement. For instance, a general contractor hires a subcontractor for a specific job, and the subcontractor agrees to hold that contractor harmless.
Hold harmless agreements are common in the construction industry as part of construction contracts. Here is an article about construction contracts.
A few basic types of hold harmless agreements are used for construction:
- Broad form: A subcontractor being insured will assume all related liability with this kind of agreement. Liability may be related to accidents, negligence on the part of the subcontractor, negligence on the part of the general contractor, and combined negligence of two. Because these agreements include broad terms, many jurisdictions actually prohibit this type of agreement. In other cases, a subcontractor would need to finance its liability with an insurance policy to validate a broad form hold harmless agreement.
- Intermediate form: An intermediate form hold harmless agreement is one of the most common kinds of this agreement. A subcontractor will assume all liability for their negligence and accidents with this kind of agreement. However, the subcontractor is not held accountable for negligence or accidents of the general contractor. The agreement does not depend on whether an action was the subcontractor's fault but on who was acting negligently or responsible for an accident. If both parties are negligent, the subcontractor is held responsible and liable for their own omissions and actions.
- Limited form: A subcontractor will be held accountable just for the negligence or accident, but in a limited way with this type of agreement. In other words, the subcontractor only assumes liability for the proportional part of their responsibility. This kind of hold harmless agreement includes other parties under their own respective hold harmless agreements for their part of negligence or accidents.
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Will Your Hold Harmless Agreement Stand Up in Court?
When it comes to hold harmless agreements, validity varies based on where you are located and the exact situation described in your agreement. Simply having a hold harmless agreement won't always protect you from a lawsuit. Additionally, a hold harmless agreement could be deemed null and void if the signing party presents a strong case about being coerced into signing the agreement.
You will need to make certain that any hold harmless agreement you use is legally compliant in your state so that you are protected from potential losses. Some states won't uphold this type of agreement if it draws on overly broad or nebulous language to protect from liability. States may also have anti-indemnity laws prohibiting hold harmless agreements in certain construction situations. Still, other hold harmless agreements may not stand up in court if the injury occurs as the result of negligence from something like subpar equipment.
Your best bet is working with an experienced lawyer who can advise you about the enforceability of your agreement and ensure you use the best language for your unique situation. That way, you'll know you have a hold harmless agreement that works for you and your business.
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