There are many aspects of a legal document that each of the parties must be aware of while signing a deal or an agreement. The hold harmless agreement is one such clause present in a legal document that a lot of people may not be aware of.
In simple terms, a hold harmless agreement is a clause present in a legal contract that absolves one party of legal liabilities for any damage or injury that the other party goes through. It ensures neither party can hold the other responsible for any losses or risks incurred for their services.
It is prevalent for businesses to incorporate a hold harmless agreement in their legal contracts in case the other parties try to hold them responsible for any damage.
You may also call the hold harmless agreement a hold harmless provision or a hold harmless clause – all of which will serve the same purpose whatsoever.
This blog is extensively dedicated to hold-harmless agreements. If you are willing to learn more about them, stay with me till the very end, as I unfold some of the most intricate details about this legal agreement type.
- It protects either of the parties entering into a legal agreement from any damage, liability, or loss.
- When you sign the agreement, the other party accepts the whole responsibility for the selective risks that are involved in contracting those services.
- These are way more common in business transactions that involve real estate, dangerous sports, construction, and every other field where there is a greater risk of loss or physical damage.
- A hold harmless agreement, however, cannot guarantee protection against liability or lawsuit.
- One can easily disregard these agreements if they are vague in language, have an overly broad scope, or are simply fraudulent.
How Does A Hold Harmless Agreement Work?
There are many businesses that offer high-risk activities. These may include skydiving sessions, deep sea diving, car racing, etc. If you ever take part in such activities, you will notice how they make you sign a hold harmless clause. While it does not guarantee absolute protection from liabilities, it acts as an indication that the customer was aware of the involved risks and still agreed to them. This agreement comes in the form of a letter.
The hold harmless agreement comes in two main types – unilateral and reciprocal.
In a unilateral agreement, one party of the contract decides not to hold the other party liable for any damages or injuries they incur. While in the reciprocal, both parties agree to not hold the other responsible for any harm caused.
Hold Harmless Agreement Example
The hold harmless agreement is a lot more common for situations other than a contract for skydiving. An apartment lease, for instance, may include a hold harmless clause that states that the landlord may not be responsible for any damage caused by tenants. As a homeowner, you may also get a hold harmless agreement while hiring a roofer in case he falls off the roof.
A sports club owner may also get a hold harmless agreement for all the members who are participating in different sports so that they cannot hold the club responsible if they get injured while playing golf or tennis. While discussing this example, you must understand that the club may also incorporate a clause requiring the participant to accept all the associated risks, including death.
Contractors may also include a hold harmless agreement to secure their businesses against any potential liability arising from their work.
Why You Should Not Sign A Hold Harmless Agreement?
While you may consider the hold harmless agreement as the perfect way to protect yourself from any liability – you may as well be wrong. There are quite a few solid reasons as to why a hold harmless agreement may not always be the best route for you to take.
First of all, the hold harmless agreement will not always guarantee protection against the law. For instance, agreements that are vague or have an overly broad scope may as well be disregarded. Moreover, the clause may also be considered void and null if either of the parties brings forward a strong case stating that they were fooled or coerced into signing the agreement.
It is also worth remembering that not all states are friendly toward a hold-harmless agreement. Certain jurisdictions offer anti-indemnity regulations that limit or even prohibit the use of hold harmless agreements among certain professions or circumstances like residential tenancies.
The Positive Side Of The Hold Harmless Agreement
Now that we have discussed the major drawbacks associated with this clause let me tell you that there are quite a few benefits of it, too, that you must not overlook either.
A hold harmless agreement may make up for an important part of the liability insurance policy of a business, which could minimize the reputation risk of the business and the financial impact of such litigation.
Hence, to throw some positive light over the hold harmless agreement, here are some of the benefits you may fetch from it:
- Legal liabilities and expenses for law firms are far less as small or start-up businesses that have to hold harmless agreement insurance face much fewer legal obligations and, therefore, may not have to hire a lawyer as often.
- One may increase your ability to focus more on the work and worry less about getting sued or finding attorneys.
- There are lower risks of taking a hit to your business’s reputation while dealing with a public legal battle. I mean, we all know how it turned out for Amber Heard.
Frequently Asked Questions!! (FAQs)
Ans. Yes, as a small business owner, you can arrange for a hold harmless agreement while leasing or renting out properties. This will protect you from any legal trouble in case a third party causes any damage to the property, which may or may not include death.
Ans. If you are looking for free hold harmless agreement templates, I am providing you with the template link, which may provide you with the outline of what you are looking for.
Ans. Signing a hold harmless agreement is the personal decision of the parties that enter into a legal contract. However, I would suggest you go through the contract thoroughly and not miss out on the core details. Do not take any unprecedented step that you may have to regret later.
Let Us Wrap Up!
I hope to have cleared all your doubts regarding a hold harmless agreement, and its do’s and don’ts. You must remember that it is, after all, a legal agreement. Hence, you must not jump into it without having full knowledge of it.
Ask questions, and clear out each of your doubts. This way, you may avoid landing in unnecessary legal trouble.