If you work in a high-risk job like construction or adventure sports – you have probably come across a Hold Harmless Agreement (HHA). This is an agreement to protect you or your company from being held liable for any property damage, financial loss, or bodily injury in connection to a specific activity.
But the devil, as they say, is in the details. What kind of clauses are commonly found in such an agreement? And what legal or practical purpose do they serve? Luckily, our template gives you a pre-structured framework you can easily adapt to your needs. By simplifying the process of creating a legally binding document, we want to ensure more clarity in liability protections without the need for extensive legal expertise.
Our template is simple – it helps you identify all parties involved, define the activities/risks covered, lay down the duty of the indemnifying party, set out any exceptions to this duty, and specify the different types of resolution procedures you can choose from in case of a conflict.
Now, let’s break down our template clause by clause:
When & Who?
Let’s start with the basics.
For example, on what date is the agreement coming into force – this is important as most Hold Harmless Agreements do not act retrospectively. This means a party can not indemnify another party for loss or damage caused prior to the date an agreement was reached.
This is followed by an identification of the parties. In other words, who is indemnifying who?
Think of an Indemnitor as the party that agrees to pay up i.e., a person or entity who will compensate the other party for any losses, damages, or liabilities they may incur. Conversely, an Indemnitee is the person or entity being compensated.
In both cases, it is important to know that you are not always dealing with one individual person or a single legal entity.
Let’s clarify with an example. In the construction industry, a contractor is responsible for overseeing the entire construction project and has to hire the services of sub-contractors to complete specialized tasks, such as electrical wiring, light fixtures, or plumbing. But what happens when something goes wrong during the execution of these tasks – resulting in significant financial loss? Who is liable? The general contractor, the subcontractor, or their respective insurance companies?
This will depend on the contents of the hold harmless agreement signed between the contractor and the subcontractor. In most cases, a clause is added to protect the contractor from financial loss or legal trouble caused by the actions of a subcontractor.
In our template, you want to carefully identify those affiliate entities, subsidiary bodies, or even individuals whose actions or losses will be covered by the agreement (say plumbers, light technicians, electricians in case of a construction related agreement). This exercise will require a good amount of due diligence and extensive negotiation on the part of both parties as it determines exactly whose losses will be paid for by whom.
Activity
Here, the parties shall list down specific, often high-risk activities that form the basis of the agreement. It is against these specific activities that an Indemnitee seeks protection against any personal liability, claims, lawsuits, losses, or damages. For this reason, this part of the agreement should be drafted in a way detailed and specific enough to hold up in court.
For example, an extreme sports club may list scuba diving or paragliding as activities against which the club is indemnified by the indemnitee – that is, the person intending to engage in these activities in full knowledge of the risks involved.
Common risks covered by a Hold Harmless Agreement include those related to breach of contract, product liability, property damage, environmental contamination, infringement of intellectual property rights, negligent acts or willful misconduct, and non-compliance with applicable laws or standards.
The Indemnification Clause
This clause is the heart of the agreement as it stipulates the exact nature and scope of the indemnitee’s obligation to protect and hold the Indemnitee harmless against various claims (such as any lawsuits, fines, or damages). This clause also specifies the set of activities or circumstances for which one party agrees to protect another from legal liability.
To cater to the needs of different situations, we add three different options so parties can identify which as well as whose actions shall be covered by the indemnity clause:
☐ (All actions) The specified Activity.
☐ (All actions except those by third parties) Any actions or failures to act by either the Indemnitee or the Indemnitor in relation to the Activity.
☐ (Actions solely by the indemnifying party) Any actions or failures to act by the Indemnitor in relation to the Activity.
Exceptions to Indemnity Obligation
But is the duty to indemnify absolute?
What about losses or damages resulting from gross negligence on the part of the indemnitee, say, not providing functional safety equipment to construction workers? In such a case, should an otherwise innocent indemnifier have to bear the burden of losses incurred in bad faith?
Well, no. Thanks to this clause, you can set specific limits and exceptions to the indemnity obligation, offering clarity on situations where the Indemnitor will not be responsible for covering certain claims.
Other common exceptions often added in indemnity agreements that you might want to consider are breach of contract, unlawful activities, or indirect damages such as loss of profits or reputational harm.
The other key part of this clause relates to the financial limit of any indemnity incurred by the Indemnitor or the ‘indemnity cap’. This refers to the maximum amount for any single claim or the cumulative total of all claims which shall not exceed a certain threshold. In our template, you can specify this amount as deliberated upon by contracting parties, or agree to have no such limit altogether.
To sum up, this clause of the agreement requires the most attention since it plays an important role in shaping the financial scope of any indemnity.
Notice of Claim
In this clause, we require the Indemnitee to provide prompt written notice of any claims within a specific time frame – for example within five or ninety business days. Such a written notice must also come with all the relevant information about the claim or legal action as well as the nature and magnitude of the loss being claimed. This clause is added to make sure that the indemnifying party has sufficient time for their legal defense with delays potentially waiving indemnification unless no material prejudice occurs.
Our template allows you to specify the exact number of days to suit the specifics of your own agreement.
Duty to Defend
Now, what happens when a legal claim is filed in a court against the party being indemnified?
Such a case triggers a duty to defend on the part of the Indemnitor shouldering the financial burden of the Indemnitee’s losses, that is, a responsibility to help the Indemnitee actively defend against lawsuits and other claims advanced by third parties.
Note that, in some state jurisdictions, the duty to defend is part of the indemnity obligation (See above) that is – it automatically flows from the promise to “indemnify”. In such cases, it may not be necessary to include a separate clause defining the duty to defend.
The most commonplace example of a ‘duty to defend’ can be found in the insurance arena, where an insurance company must defend its policyholder/insured against a claim by a third party, including hiring lawyers and paying court fees.
Disputes and Jurisdiction
Now, what happens when both parties find themselves at loggerheads about a specific aspect of their Agreement?
In this clause, we provide a framework through which any future disputes between the parties may be resolved by identifying multiple options for dispute resolution. This flexibility can help prevent prolonged conflicts and clarify each party’s rights.
In our template, we provide four options: Court Litigation, Binding Arbitration, Mediation, Mediation and Arbitration.
Be aware that these mechanisms differ in how much control the parties have over the process. While mediation and arbitration help parties solve serious conflicts without the expense and hassle of traditional litigation in the courts, only mediation works based on the consensus principle.
Both parties must deliberate upon which mechanism works best for them. To help you customize the agreement to your specific jurisdictional context, our template uses a blank space for each aforementioned mechanism where you can identify the exact location and US state that applies to you.
No Waiver
We add this clause to prevent any party from unintentionally giving up their rights or remedies. This is done by making sure that any waiver of rights or remedies stipulated in this agreement template is explicitly written. This ensures that the rights of both parties remain intact even if they are not immediately exercised.
For instance, if the indemnified party fails to strictly adhere to the terms of this Hold Harmless Agreement, that does not constitute a waiver of those terms, which shall still hold in a court of law.
Signatures
In the end, we provide space for two representatives of both parties to add their dated signatures to the agreement, making it legally binding.
Who Is This Template For?
Our template can be a useful and time-saving tool for:
- Businesses and contractors who want to protect themselves against claims from clients, partners, or third parties.
- Event organizers looking to shield themselves from liability during events or activities.
- Service Providers who want to make sure they are not held accountable for certain risks inherent in their services.
- Individuals looking to rent out property or equipment
Here are some real-life examples of when you can use this template:
- You are a landlord who is leasing an apartment but wants to make sure you are not responsible for any damage caused by the tenant.
- You are a homeowner hiring a roofer and need to protect yourself against a lawsuit if the roofer falls off the roof.
- You own a sports club and want to prevent your members from suing you if they are injured while exercising.
- You are a contractor building a deck and want to avoid future lawsuits for injuries occurring on that deck.
Template Disclaimer
Our template is based on an in-depth textual analysis of hundreds of indemnity agreements used across state jurisdictions, as well as specific industries that involve a certain level of risk or potential liability (such as life insurance, construction, real estate, event planning, etc.).
While you must recognize the fact that there are no “standard” ready-made agreements that perfectly fit your specific contractual needs, our template provides an adjustable framework containing all the contractual basics you can customize according to your own needs & terms.
Remember, Hold Harmless Agreements need to be clear, put together with care, and recognized by the state where the activities take place. For this reason, make sure you run your final version by a legal practitioner who is both, licensed to practice law in the relevant state jurisdiction, and well-versed in the workings of the specific industry your agreement relates to.
Our fillable and print-ready template can be easily downloaded in Word, Google Docs, and PDF formats!
