Hold harmless provision: Overview, definition, and example
What is a hold harmless provision?
A hold harmless provision is a clause in a contract in which one party agrees to take responsibility for certain risks, losses, or damages that may occur, thereby protecting the other party from any liability. In other words, the party agreeing to "hold harmless" promises not to hold the other party responsible for certain actions, often related to negligence, accidents, or legal claims that might arise during the execution of the contract.
The provision typically specifies the scope of the protection, such as whether it covers specific events or circumstances, and whether it includes protection for legal fees and other related costs. It is commonly used in contracts to shift risk from one party to another and to provide legal protection in case something goes wrong.
Why is a hold harmless provision important?
A hold harmless provision is important because it clarifies the allocation of risk and responsibility between the parties involved in a contract. By including such a provision, the party assuming responsibility for risks can ensure they are not held liable for certain damages or legal issues that arise during the contract period.
For businesses, it offers financial protection by transferring liability in case of accidents, lawsuits, or other issues that may arise. For the party being protected, it provides peace of mind knowing that they are shielded from potential legal or financial consequences related to specific risks.
Understanding the hold harmless provision through an example
Imagine a construction company entering into a contract with a property owner to renovate a building. The contract includes a hold harmless provision stating that the construction company will not hold the property owner responsible for any injuries or damages that occur during the renovation process. In the event of an accident on the job site, the construction company agrees to cover the costs and defend the property owner from any legal claims resulting from the incident.
In another example, a company hires a third-party contractor to provide services at their event. The contract includes a hold harmless provision stating that the contractor will not hold the company responsible for any damages or losses that occur during the event. If an accident happens or something is damaged at the event, the contractor agrees to assume responsibility and cover any related costs.
An example of a hold harmless provision clause
Here’s how a hold harmless provision might appear in a contract:
“The Contractor agrees to indemnify and hold harmless the Client from and against any and all claims, damages, liabilities, or expenses, including legal fees, arising from the Contractor’s actions, negligence, or omissions during the course of this Agreement.”
Conclusion
A hold harmless provision is a critical part of many contracts, as it defines how liability and risk are allocated between the parties. By including such a provision, businesses can mitigate the financial and legal risks associated with accidents, lawsuits, or other claims that may arise during the contract’s execution. It offers a way for parties to protect themselves from unforeseen liabilities and ensures a clear understanding of responsibility.
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.