Law

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What is the Hold Harmless Clause?

Mary McMahon

Last Modified Date: February 03, 2024

A hold harmless clause is a clause in a contract that indicates that one party agrees not to hold the other responsible for damages, liabilities, and losses that may be incurred. In a unilateral version, only one party agrees to this, while in a reciprocal clause, both parties to the contract endorse the clause. It is important for individuals to review all contracts carefully to confirm that they do not contain any surprises, and if a contract contains a hold harmless clause, people should make sure that they understand when and how the clause may apply.

In a simple example, a homeowner might agree not to hold a contractor responsible if she or he is unable to complete work due to circumstances beyond his or her control. These might include weather that slows work, supplier failures that hold up the process by making it impossible to obtain materials, and so forth. In this case, the contractor cannot be held liable for problems experienced by the homeowner as a result of slowed construction; for instance, the homeowner cannot sue to force the contractor to pay for a hotel room if the homeowner is obliged to stay in a hotel as a result of slowed or stopped work.

In a hold harmless clause, one party agrees not to hold another responsible for damages or injuries involved in a given situation.

The language that surrounds the clause is usually specific to the situation, and describes the circumstances that it covers. If the language appears unclear or ambiguous, this should be discussed before the contract is signed. In the example above, for instance, a homeowner wants to make sure that he or she does have legal options if a contractor simply walks off the job, or starts showing up to work late repeatedly, causing work to slow or stop. As a result, there would be a need to confirm that the hold harmless clause does not apply to circumstances that the contractor can control.

It is important for individuals to review all contracts carefully to confirm that they do not contain any surprises.

Agreeing to a clause does not mean that someone has no legal options if there is a problem with the contract. It only applies to the specific situations that are spelled out. If a party behaves negligently, breaches the contract, or engages in other activities that are not legal, the other party can take action. The purpose of a hold harmless clause is to absolve people of liability in the event of a clearly defined problem that could foreseeably arise during the completion of the contract or could present an obstacle to its fulfillment.

Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a WiseGEEK researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

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Discussion Comments

oscar23

June 30, 2011

@ddljohn – Wow, I had never thought of this kind of clause in that way. I actually had only thought of it in terms of actual land/home property.

It sounds to me like these kinds of laws need to be checked and adjusted to a society full of people who do not want to responsible for anything whether they are or not. Unfortunately, that is the kind of world that we live in today.

ddljohn

June 29, 2011

Aside from property, what worries me about this clause is when people get hurt. What if hospital equipment were sold with the requirement that a hospital agree to a hold harmless clause? If the equipment broke down and cause the patient to die, the company which made the equipment wouldn't be held responsible at all.

I don't think that's very fair. If there is negligence- including negligence in manufacturing equipment and checking for mistakes- the party who did this should be punished. I feel that hold harmless agreements might be used to transfer responsibility and liability to another party.

discographer

June 29, 2011

I was at a city government meeting when they began to discuss this topic. I'm not quite sure how this works but I think local governments might require individuals and businesses to sign this clause and it applies to damage done by the police department or fire department of that city.

I know that city employees wouldn't intentionally damage anyone's property, but it might happen while they are working. If a fireman accidentally damages someone's car while trying to put out a fire, we can't really blame the fireman.

But I do think that the city should be liable for these damages, they should make payments to the individual or business who has to pay money to have their property fixed or replaced.

What do you think? Should cities have individuals and business sign a hold harmless clause for their police and fire department?

serenesurface

June 28, 2011

My brother is a psychologist and he is also a party of a hold harmless clause. He was asked to sign it by insurance companies who do not want to be sued if they go bankrupt and are unable to pay a patient's bill even though they are supposed to.

Apparently many patients were required to pay for their sessions even though it was not their fault. Their insurance company had failed to make the payment to hospitals and doctors because of bankruptcy.

So the clause is to protect patients' rights who cannot afford to pay for these services or who should not be required to pay since they already made payments to their insurance company.

My brother does everything possible to help patients and would never want to put a patient in a bad situation so he signed the clause. Hopefully, there won't be many bankruptcies though because he would be losing a lot of money if there is.