ClauseryWhat is a hold harmless agreement? Types, examples and limits
A hold harmless agreement is a promise by one party not to hold another responsible for certain losses, and usually to cover the cost of claims that other people bring. It moves the risk of an activity onto the party best placed to control it.
How it works: an example
A caterer rents a hall for a wedding. The hall's owner asks the caterer to sign a hold harmless agreement. If a guest is injured by the caterer's equipment and sues the owner, the caterer must pay for the claim and the owner's legal costs. The owner, who had no control over the caterer's work, is protected; the caterer, who did, carries the risk and insures against it.
Where they are used
- Renting a venue, premises or equipment.
- Contractors and tradespeople working on someone else's property.
- Events, sponsorships and use of land, such as hunting, filming or a car show in a private car park.
- Lending a vehicle, a boat or tools.
- Subcontracts, where a contractor passes the risk of a subcontractor's work back to the subcontractor.
One-way or mutual
In a one-way (unilateral) agreement only one party gives the promise, usually the one carrying out the activity. In a mutual (reciprocal) agreement each party covers the other for claims caused by its own acts. Mutual agreements are common between businesses of similar size, where each controls part of the risk.
Broad, intermediate and limited forms
In construction, hold harmless clauses are often described by how much risk they shift:
- Broad form: the indemnifying party covers claims even when they are caused entirely by the other party's negligence.
- Intermediate form: it covers claims unless they are caused solely by the other party.
- Limited (comparative) form: it covers only the share of the loss caused by its own fault.
Many US states have anti-indemnity laws that make broad-form clauses unenforceable in construction contracts, and some limit intermediate ones too, so check the rules before you rely on one for building work.
Hold harmless, indemnify and defend
The words often appear together: "indemnify, defend and hold harmless". Some courts treat "indemnify" and "hold harmless" as meaning the same thing; others read "hold harmless" as also giving up claims against the protected party. A duty to defend is separate and valuable: it means the indemnifying party must pay for the defence of a claim as it happens, rather than reimbursing costs only after a court decides who was at fault.
Hold harmless agreement or liability waiver?
A liability waiver is signed by a participant who gives up their own right to sue, for example before a climbing class. A hold harmless agreement usually goes further: the signer also covers the other party against claims by third parties. A gym might use a waiver for members and a hold harmless agreement for a personal trainer who rents space there. Are liability waivers enforceable? covers how waivers are tested.
What makes one hold up
- Clear wording. Say what activity is covered, which losses, and whether the protection extends to the protected party's own negligence. Courts read unclear indemnities narrowly.
- Signatures from both parties, before the activity starts.
- Sensible limits. Courts usually refuse to enforce an indemnity for gross negligence or deliberate wrongdoing, and some activities are protected by statute.
- Insurance behind the promise. An indemnity is only worth what the indemnifying party can pay. Ask for liability insurance, to be named as an additional insured, and a certificate of insurance, and check that your own policy covers any liability you take on under a contract.
Free templates
The free hold harmless agreement can be one-way or mutual, with an optional duty to defend, insurance and additional insured status, and it excludes gross negligence and willful misconduct. For participants, use the liability waiver; to settle a dispute that has already happened, the general release. The indemnification clause page has sample wording to add to another contract.
General information, not legal advice. Whether a hold harmless agreement is enforceable depends on local law and the facts; have it reviewed for significant risks.
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