Hold Harmless Clause – Definition

Cite this article as:"Hold Harmless Clause – Definition," in The Business Professor, updated January 10, 2020, last accessed May 25, 2020, https://thebusinessprofessor.com/lesson/hold-harmless-clause-definition/.

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Hold Harmless Clause Definition

A hold harmless clause is an agreement in a legal contract that states that a party is free from obligation resulting from injuries or damages suffered by the other party. This clause might cover one party or both parties in a legal contract, it states that one party will not hold another party liable for damages, injuries, and risks suffered.

A hold harmless clause can be used in various legal contracts but it is commonly used in construction contracts. Business owners can also use the hold harmless clause when the business operations entail risks when this clause is used, it is difficult to hold the business owner liable for physical risk, injuries or damage suffered.

A Little More on What is a  Hold Harmless Clause

Businesses that have operations and services with high risks often use the hold harmless clause to release or protect themselves from consequences and liabilities due to injuries, risks, and damages suffered by the other party.

The inclusion of a hold harmless clause in a legal contract does not invalidate a lawsuit if the need arises. This means that this provision does not offer total protection against lawsuit or liability in certain cases.

The Hold Harmless Clause can either be unilateral or reciprocal, when unilateral, it protects only one party but when reciprocal, both parties are protected.

Examples of Hold Harmless Clauses

When a party signs a legal contract that has a hold harmless clause, it indicates that the party is aware of the risks entails in the agreement and has agreed to take them without making any recourse to the other party.

A hold harmless clause can be used in many contracts such as construction contracts, lease agreements, and others. For example, in a lease agreement, the owner of a property can include a hold harmless provision in the contract, which means that he is not liable for damages that occur to the building during the tenancy of the other party.

Also, a contractor can include a hold harmless clause to indicate that he is not liable to injuries or damages suffered by the subcontractors when working on a construction site.

Special Considerations

Despite that the hold harmless clause offers protection to either a party or both parties in a legal contract, this protection is not a guarantee against a lawsuit. While many states revere the hold harmless clause, some states do not favor this provision, in this case, a lawsuit can be filed against a party to face the consequences of the risks and injuries incurred by the other party in the agreement.

Also, the hold harmless clause may be regarded null and void when there is proof that a party was coerced into signing the agreement or the clause was not stated in clear terms.

Here are some key points to know about the hold harmless clause ;

  • The hold harmless clause is a provision in a legal contract that protects a party or both parties from liabilities or consequences resulting from risks, injuries, and damages faced by the other party.
  • This Clause can be used in different legal agreements, including construction agreements and lease agreements.
  • A hold harmless clause can be unilateral (favoring one party) or reciprocal (protecting both parties).
  • A hold harmless clause does not offer total protection against liabilities or lawsuits.

References for “Hold Harmless Clause

https://www.investopedia.com/terms/h/hold-harmless-clause.asp

www.businessdictionary.com/definition/hold-harmless-clause.html

https://www.crmbrokers.com.au/news/what-is-a-hold-harmless-clause/

https://www.upcounsel.com/hold-harmless

https://www.upcounsel.com/difference-between-indemnify-and-hold-harmless

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