Hold harmless: Overview, definition, and example
What is hold harmless?
"Hold harmless" is a legal term that refers to a clause or provision in an agreement where one party agrees to take responsibility for any potential legal claims, losses, or damages that may arise from a specific activity or situation, and to protect the other party from liability. The "hold harmless" clause typically shifts the risk from one party to another, ensuring that the party providing the protection (the indemnitor) will cover any costs, damages, or legal fees resulting from an incident or legal claim.
For example, a contractor might include a "hold harmless" clause in an agreement with a subcontractor, stating that the subcontractor will assume responsibility for any injuries that occur on the job site, relieving the contractor of liability.
Why is hold harmless important?
The "hold harmless" clause is important because it helps manage risk by clearly assigning responsibility for damages, legal fees, or injuries in certain situations. This provision is commonly used in contracts to protect one party from being financially or legally responsible for issues that are outside their control. It provides peace of mind for the party receiving the protection, knowing they won't be held liable for certain incidents or actions.
For businesses, using a "hold harmless" clause can help prevent costly litigation and manage risks related to activities that might result in third-party claims. For individuals, it ensures that they are protected from potential legal or financial consequences arising from the other party’s actions or negligence.
Understanding hold harmless through an example
Imagine a company hires a cleaning service for its office. As part of the contract, the cleaning company includes a "hold harmless" clause stating that they will assume responsibility for any damage caused during their cleaning, such as accidentally breaking office equipment. The company, in turn, is protected from liability for those damages and doesn't have to bear the cost of repairs.
In another example, a tour company may have participants sign a waiver with a "hold harmless" clause before going on a hiking trip. The clause states that if a participant is injured during the hike, the tour company will not be held responsible and that the participant agrees to hold the company harmless for any claims or legal costs.
An example of a hold harmless clause
Here’s how a "hold harmless" clause might appear in a contract:
“The Contractor agrees to hold harmless and indemnify the Client from any claims, damages, losses, or expenses, including legal fees, arising out of or in connection with the performance of the Contractor's duties under this Agreement, except in cases of gross negligence or willful misconduct by the Client.”
Conclusion
A "hold harmless" clause is a crucial tool in managing legal and financial risks in contracts, as it clearly defines responsibility and protects one party from liability for specific actions or incidents. Whether in business agreements, services contracts, or personal agreements, this provision ensures that the party offering protection is shielded from certain legal claims or expenses. By including a "hold harmless" clause, parties can minimize potential disputes and create clearer, more secure agreements.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.