A Brief Introduction About the Hold Harmless Agreement
The hold harmless agreement is an agreement that states that one party will not be held responsible if another party suffers any physical damage or harm during the performance of a service or while undertaking a particular activity. Through this contract, a party waives his right to hold the other person responsible for any damage or accident that might occur. The person who is offering the protection under this agreement should be made aware of the risk involved in the activity that he is carrying out and he should promise not to hold the opposite party responsible if a mishap takes place. The hold harmless clause is used to absolve a person from liability if another person suffers from any injury, danger, or damage. For e.g., if one party hires another party for some construction work and does not want to be held responsible for any injury that such contractor may suffer, he will create such an agreement to protect himself. The person who is protected under this agreement cannot be sued if any untoward incident takes place during the performance of the service or carrying out of the activity. It may be a standalone agreement, or it may also be a part of a larger liability waiver agreement.
This agreement can be made to protect only one party under the agreement, or both parties can agree to protect and hold each other harmless. Hence the agreement may be a unilateral or a bilateral one. This agreement is also called a ‘release of liability’ or an ‘indemnity agreement.’
Who take the Hold Harmless Agreement- People Involved
Hold harmless agreement is entered into between a party who wishes to protect himself from any liability during a particular activity and a party who agrees to provide him with such protection. The agreement may also be a bilateral one protecting both parties.
Purpose of the Hold Harmless Agreement- Why Do You Need It?
The purpose of a hold harmless agreement is to protect an innocent party from any liability attached to an injury suffered by another person. The person who is providing protection agrees to indemnify and hold harmless the other party. This type of agreement is usually created when a person undertakes an activity that involves a certain risk. An example of a hold harmless clause is an agreement for skydiving lessons, a construction contract, or even a sports event. Businesses that are involved in activities that have a high level of risk prefer to enter into this agreement with their clients to protect themselves in a legal and financial manner. Such agreements are quite common in areas such as construction, real estate, and service industries where there is a high degree of danger involved. This agreement may also be used by sports organisations and gyms to protect themselves if a member suffers from any injury.
However, such an agreement will not protect a party who has been negligent in some way. If a person is aware that a particular piece of equipment is broken or some machinery is faulty and does not stop people from using it, he will be held liable for any injury that results from it. Hence this agreement can only be used to protect a person who is innocent and had no role in the injury or damage whatsoever. It is for this reason that the protection given under the agreement must be well-drafted and must leave no scope for any doubts or any loopholes.
Contents of the Hold Harmless Agreement
The hold harmless agreement must include the names of the parties involved, the date from which the agreement shall be effective and the territory in which it shall operate. The agreement should contain all the important information such as the name of the party who shall be held harmless and the name of the party who is offering such protection from liability. The agreement must also mention if the protection that is being offered is general, services protection or property use protection. General protection will protect the party from a specific occurrence that will be laid down in the agreement. Services protection will come into play when particular services are being provided by a person. Use of property protection is when a party uses or rents out a property belonging to a certain person. In all these types of protection, the party who is protected under the agreement cannot be held liable for any occurrence which takes place through no fault of his.
The particular reason why this agreement is created must be stated – it may be for a specific event or a specific service. This helps to make the scope of the agreement narrow and well defined, and hence, there will be a higher chance that the validity of the agreement will be upheld in court.
How to Draft the Hold Harmless Agreement
The following are the steps to follow while drafting a hold harmless agreement in order to make sure that the agreement is valid and binding:
- The parties must decide the scope of the protection that will be offered to the person who will be protected from liability. The scope must be defined clearly, and it should not be too broad. If the scope of the agreement is too broad, it might be difficult to enforce the contract.
- All the important information, including the names of the parties and their contact information, must be laid down in the agreement clearly.
- The purpose for which the agreement is created must also be mentioned.
- The agreement must be reviewed thoroughly by the parties to make sure that their rights have been adequately covered.
- The agreement needs to be signed by both parties. This will help to ensure that the agreement is binding in nature.
- The negotiation strategy that must be followed is to ensure the interests of both parties are adequately protected under the agreement,
- Both parties must make sure that the agreement is balanced and unbiased. The interests of the party being protected and the party offering protection must be equally provided for.
Benefits and Drawbacks of the Hold Harmless Agreement
The following are the benefits and drawbacks of having a hold harmless agreement:
- This agreement can be useful when a party wishes to protect himself from liability if an incident occurs on his property or when he is conducting an activity that involves an element of risk. He cannot be held responsible for any untoward incident if this agreement is in place.
- Such an agreement can help to minimize litigation. Businesses that have such an agreement in place are sued less than businesses who don’t enter into such agreements. This helps to save money and time of the businesses who will otherwise be involved in multiple lawsuits. This, in turn, helps to protect the reputation of a business as they won’t be involved in public legal battles.
- A possible drawback is that this agreement may not be upheld in court if the language used is too vague. The scope of the protection offered under the agreement must not be too broad.
What Happens in Case of Violation?
Whether a party to this agreement has a remedy when the other party violates the provisions of this agreement will depend on the wording of the agreement. Such an agreement may not always protect the intended party from liability and will not be upheld if the wording of the agreement is vague or its scope is too broad. The agreement may be enforced if the risk involved is well explained and the parties signing the agreement are aware of what they are signing and are prepared for the consequences. The protection that is being given under the agreement must be explained in clear and precise language.
Whether such an agreement will be upheld in court also depends on whether the agreement is in the public interest. For example, an agreement to hold harmless an airline company if an accident takes place is not in the public interest and hence will not be upheld in court.
In conclusion, a hold harmless agreement can be helpful in protecting a person from liability if the other person is made aware of the risk that he is undertaking when he carries out a particular service or activity, and he agrees to go ahead with it. The language of the agreement must be free from ambiguity and clear-cut. This agreement can be extremely useful in a variety of situations and especially for businesses who undertake activities involving an element of risk. This agreement is very useful in protecting a person who is not responsible for the mishap or accident in question and saves from lawsuits that will waste his time and money. It prevents malicious litigation against a company.