What does “Hold Harmless” Mean?

0Hopefully you have read our blog titled “Indemnification Clauses,” because indemnification is commonly confused with “hold harmless” provisions, and rightfully so. In fact, many argue that the two are one in the same. A hold harmless provision provides that a party is not liable for certain damages under a contract and shifts the responsibility for those damages to the other party. A common example of a hold harmless provision is Party A agrees to hold harmless Party B for its (Party B’s) negligence, intentional acts or omissions.

The courts that find indemnification and hold harmless provisions as being two distinct clauses follow the reasoning that every word of a contract should be given meaning. The indemnification language provides a party “indemnity” (no liability to third parties) while the hold-harmless clause provides the party exculpation (releasing first-party liability or a wrongdoing indemnitee).

An exculpatory clause is a provision which is intended to protect one party from being sued for their wrongdoing or negligence. Many courts find the terms “indemnification” and “hold-harmless” to be synonymous. However, it is important to confer with a business attorney to understand what the applicable state law provides for the type of contract you are entering into. Mistakes involving these types of provisions can be quite costly.

As a practical matter, it may be advisable to include both an indemnification clause and a hold harmless clause in your agreements so you are protected by whatever definition is applied. It is also important to note that a “responsibility clause” is similar to an indemnification or hold harmless clause, but it is typically less protective. Again, you should consult with a lawyer regarding the type of clause being used in the contract, the state law to be applied, and the right strategy for protecting your best interests.

If you have questions regarding indemnification, hold harmless provisions, or other business law matters, contact us today to schedule an initial consultation. Leslie S. Marell has been practicing business and commercial law for over 25 years. She is established in private practice and has extensive legal experience counseling companies in the areas of business contracts and transactions, purchasing, sales, marketing, computer and technology law, employment law and day to day legal matters. Let us provide your company the advice and guidance you need.