Hold Harmless Clause: Definition, How It’s Used, and Examples
What is a hold harmless clause?
A hold harmless clause (also called a hold harmless agreement, hold harmless provision, or indemnity agreement) is a contract term in which one party agrees not to hold the other party legally liable for specified claims, losses, or damages. It shifts or allocates risk between parties so that the party requesting protection is shielded from certain legal responsibility arising from the agreed activity or service.
How it works
- The clause can be:
- Unilateral — only one party is protected.
- Reciprocal (mutual) — both parties agree to protect each other.
- It commonly appears in waivers, service contracts, leases, and construction agreements.
- A properly drafted clause will explicitly describe the risks being assumed and, when applicable, state that the signer waives the right to sue for negligence.
- It is not absolute protection; courts examine the language, context, and public policy when deciding enforceability.
Common examples
- Recreational activities: Skydiving, climbing gyms, or sports clubs ask participants to sign waivers to acknowledge risks and limit the operator’s liability.
- Real estate leases: Commercial or residential leases may include clauses where tenants agree not to hold landlords responsible for certain injuries or damages.
- Construction and contracting: Contractors include hold harmless language to avoid lawsuits tied to work performed; property owners may include reciprocal protections for contractor injuries.
- Service providers: Vendors and consultants may ask clients to assume risks for specific services or outcomes.
Limitations and enforceability
- Clarity and scope: Vague or overly broad clauses are often disregarded by courts. Specific language describing covered risks and obligations increases enforceability.
- Public policy and statutory limits: Some jurisdictions restrict or prohibit certain indemnity provisions (for example, anti-indemnity rules for particular professions or residential tenancies).
- Fraud, coercion, or unconscionability: A clause can be invalidated if it was signed under duress, misrepresentation, or if it is fundamentally unfair.
- Negligence and gross negligence: Some courts refuse to enforce waivers that attempt to shield parties from liability for gross negligence or intentional misconduct.
Quick FAQs
- What does “hold harmless” mean?
It means one party agrees not to hold the other responsible for certain losses or claims identified in the contract. - How binding is a hold harmless agreement?
It can be binding if the clause is clear, voluntarily agreed to, and valid under applicable state law; however, ambiguous or unlawful provisions may be rejected. - Is a hold harmless clause the same as insurance?
No. It allocates legal responsibility between parties; it does not provide financial coverage like an insurance policy does. Parties often still carry insurance to cover the risks described in the clause.
Key takeaways
- Hold harmless clauses allocate risk and can limit legal exposure when properly drafted.
- They are common in high-risk industries (recreation, construction, real estate) but appear in many contracts.
- Enforceability depends on precise language and local law; they do not protect against all claims, especially those involving fraud or gross negligence.
- Seek clear, specific wording and consider legal review to ensure the clause is effective and compliant with jurisdictional rules.
Bottom line
A hold harmless clause is a useful risk-allocation tool in contracts, but it is not a guarantee against liability. To be effective and enforceable, the clause must be clear, appropriately limited, and consistent with applicable laws. When in doubt, consult legal counsel to draft or review such provisions.