An Overview of Hold Harmless Agreements
A hold harmless agreement is a document in which one party agrees not to hold the other responsible for certain damages or liabilities. Parties may enter into a hold harmless agreement when they are entering into a contract with one another. For example, a homeowner may enter into a contract with a contractor to do some work on their home. Before either party releases their funds , the contractor may ask the homeowner to sign a hold harmless agreement saying that the contractor will not be held responsible for any damage that the homeowner causes if the homeowner does his or her own repairs after the contractor has finished its work.
A hold harmless agreement may also be used in real estate transactions where the real estate agent agrees not to be held responsible for any environmental damage found on the property. The homebuyer agrees to make sure that the property is not contaminated as a result of the sale and will not hold the real estate agent who conducted the sale responsible for any environmental contamination issues discovered after the fact.
Individuals and companies may also enter into a hold harmless agreement in order to protect themselves in the event of an occupational injury to an employee. The employer may request that the employee agree to accept full responsibility for all workplace injuries.
Hold harmless agreements may be legally binding in many states and the parties involved should seek guidance from an attorney to be sure it is executed properly and provides the protections you seek.
Components of a Hold Harmless Agreement
When entering into a hold harmless agreement, it is imperative that the essential components be included and thoroughly outlined in the agreement. Although the exact presentation will depend on the circumstances of the parties involved, the following elements are commonly found in a hold harmless agreement:
The Parties – Clearly specify who the indemnitor and the indemnitee are.
Scope of Indemnity – Outline the extent of the indemnity, including any exceptions to indemnity. Generally, the indemnity will extend to actions or omissions of the indemnitor or that of the indemnitor’s employees or agents; however, carve-outs from indemnity should be stated.
Limitations on Indemnity – Include any applicable limitations on indemnity, such as a monetary cap on indemnification. To the extent that the liability is limited, it must be specifically stated in the agreement. Also, include whether the indemnity will be limited to third party claims or losses only. If the indemnity is not clear on this point, courts may occasionally construe it to obligate the indemnitor to indemnify the indemnitee for its own negligence.
Permitted Exceptions – Specify who has final approval in terms of allowable exceptions. Also include whether the indemnitor can unreasonably withhold or delay consent to any proposed exceptions. Some agreements require prior written consent by the indemnitee for any work performed by the indemnitor or any independent contractors hired to perform work that is subject to a hold harmless agreement.
Should You Use a Hold Harmless Agreement?
Hold harmless agreements are used throughout an array of different settings and contexts. You’ll most commonly see them being used within businesses and industries where there is a greater probability of accidents or unforeseen circumstances that could result in injury, personal loss, or even death to one of the parties.
These industries include:
Construction
If you’re someone who hires subcontractors to help you out with your important construction project, you might have them sign a hold harmless agreement that gives them the understanding that they are responsible for the safety of the workers hired during the project. For instance, say you own a plumbing business and you need some help with a large project. You hire a few subcontractors to help you, but you have them all sign a hold harmless agreement that gives you legal recourse if a person is injured on the project from one of their crews. If the agreement isn’t signed, you could potentially be held liable in court for the injuries, regardless of whose fault it was.
Event Hosting
Planning a sporting event? A concert? Tons of people are going to show up to have a great time, but some probably won’t be sober, and a few will probably get hurt. Will you be responsible for the injuries they cause to themselves or others? Probably not, which is why obtaining a hold harmless agreement is essential. This way, if someone gets injured because of the actions of another individual, the injured person will have to resolve his or her claim against the person with loose screws at the event.
Leasing
Hold harmless agreements are often used in leases to keep landlords from getting roped into potential liability from injuries suffered by guests on the property. If you were to rent out a home to a family who then invites friends over for a party, you could be potentially responsible for any injuries those guests incur.
Employees
If you’re going to require your employees to perform their tasks outside of a typical work environment, you might want them to sign hold harmless agreements. For example, if you own a stair railing repair business and you have to send your employees to perform jobs on multi-story buildings, you wouldn’t want to be held responsible for an accident from a fall.
How to Draft a Hold Harmless Agreement
Caution is necessary, however, when drafting a hold harmless agreement. After all it’s intended to protect one party from liability at the expense of another. Making certain that it’s properly drafted and includes the necessary language to be enforceable in the future is extremely important.
For starters, never use a form agreement without having a qualified attorney review it. In general, there are several key points to consider:
(i) Make it damning. Be explicit about what is excluded from the hold harmless agreement and the extent to which liability is passed on to the tenant or customer. A typical real estate lease will contain a clause that includes an indemnity provision, which will put liability squarely in the hands of the tenant.
(i) Both parties should seek legal counsel prior to entering into one. There are states that view the hold harmless clause as waiver of liability. Others require that the contract specifically state that it didn’t abrogate the possibility of pursuing claims . You want your indemnity to hold up in the future, which means having an attorney examine the clause and make sure it contains the right terms for your protection.
(iii) If you’re the tenant, you want to ensure that the agreement is not too broad, which could leave you liable for anything and everything. At a minimum, ask the landlord to limit liability to negligence.
(iv) Whether you’re the landlord or the tenant, you want the right to be defended by the other. Sometimes a court will not allow you to include language in the agreement that requires you to be defended, however it’s worth trying to get it in.
(v) Have both parties sign the contract. It sounds simple, but not every hold harmless agreement is signed by both parties. Make sure that any contract you enter into is signed and contains adequate counter signatures, or else it may not be worth the paper it’s written on.
Finally, keep in mind that these contracts are normally governed by a state’s law, so pay attention to any laws that may be relevant to them. Seek out a qualified attorney to advise you on this issue.
Hold Harmless Agreement PDF Free Template
As a result of the growing digitization of essential documents, many free hold harmless agreement PDF templates are available for download online. Such templates are relatively easy to use. Enter the necessary information into the template’s fields to produce a comprehensive agreement that can be printed for use. After using such a template to generate a PDF with all relevant information, print all pages and begin the process of modifying the printed document to fill in the gaps regarding specifics. The fact that a document exists in a generic form is not a substitute for the law, however, and court personnel will have little sympathy when an otherwise valid document does not have all the necessary elements.
The law requires that certain information be present in order for an agreement to be trusted to a sufficient degree. This includes information that goes beyond the names of both parties, the transactional language and language about damages, indemnities and liability. The law also requires that certain formatting be used, and that certain requirements be met for the contract to have the level of authority and respect that it requires. Modifying a typical generic hold harmless agreement PDF template is fairly easy. Aside from the information noted above, there should be a reference to the signature page and instructions that the parties must sign and date the document. Additional pages may follow the last page of the agreement itself and should include instructions about how the agreement will be preserved or stored and who will have access to it. If a generic agreement is used and not enhanced by the original parties, then certain problems can arise. It is easy to overlook certain concerns about these details when one is in a hurry to finalize a deal. Leaving out certain aspects of the agreement due to oversights in the creation of a generic hold harmless agreement PDF template can lead to a poor quality agreement, one that has little value when compared to what the document could have been had the parties taken the time to customize the document to fit specific needs.
Legal Advice and Considerations
Before using a hold harmless agreement there are a number of legal considerations which should be considered. These include: Risks. There is a significant risk with a hold harmless agreement that, if you rely on one, you could end up being responsible for damages caused to another party. As the person being held harmless it is important to make sure that the document is legally binding.
State law. Certain state laws will hold that indemnity agreements are void and not enforceable. You should check the laws of your state to ensure that the clauses are permissible.
Seek advice. To ensure that the interpretation of the hold harmless agreement is correct , legal advice should be sought before taking action based on it or being a party to it. Once a hold harmless is signed, it is likely that a lawyer will be engaged to submit a defense to a claim on your behalf. If you then wish to claim the indemnity, the lawyer may be asked to do so. For this reason, the hold harmless agreement should refer to a duty to indemnify the lawyer, so as to ensure they will be protected by the indemnity from the claimant as well. If the lawyer is not included in the indemnity clause, there is a risk that the claimant will seek to join them to the proceeding.
