Using a hold harmless agreement

When you own a business that hosts physical activities, you want to protect your business from a lawsuit in case there's an injury. Even though clients who sign up for your club or activities usually know the risks involved in, say, rock climbing or exercising at a gym, that doesn't mean they won't sue.

Likewise, if you have contractors in your home or business to make repairs or remodel, you want to protect yourself in case they get injured while on your property. A hold harmless agreement can protect you from liability in these situations.

Overiew of hold harmless agrreements

A hold harmless agreement (HHA) is a contract that prevents one party from being liable to the other if there are injuries or damages. Contracts are either unilateral, meaning the contract protects only one party, or reciprocal, where both parties waive liability against each other. HHAs can be used to protect both individuals and companies.

Although HHAs are most commonly associated with businesses that host potentially risky activities, such as indoor rock climbing, bungee jumping, or even boat rentals, these legal documents can also be useful in common transactions. For example, if you lend your car to a friend, you can have him sign an HHA so that if he gets into an accident, he and the other party to the accident can't sue you. Without a simple hold harmless agreement, even though you didn't cause the accident, you may be liable merely because you're the owner.

Releases, waivers, and hold harmless agreements

A release and a hold harmless agreement are usually considered the same thing, as is a waiver of liability. All three have similar language and the same intent of protecting you from liability to another party. Some contracts also contain hold harmless clauses, written to protect one or both parties.

Hold harmless agreements or clauses may contain language that the other party is “releasing, indemnifying, and holding you harmless" from any liability to them, or that you're holding the other party harmless. Sometimes the words “waive and defend" are also in these phrases, but the overall purpose is protection from liability. Every time you sign an agreement to use a golf course or a health spa, you're agreeing that if you get injured, you won't look for compensation from the facility.

The validity of hold harmless agreements

Hold harmless agreements are often valid, but validity also depends on your state's laws, the type of business being protected, and what's in the agreement. Some states don't recognize HHAs or clauses, while some courts limit them. Some jobs are inherently dangerous, such as working in building construction, so courts don't often uphold hold harmless agreements in such situations.

Likewise, some hold harmless agreements or clauses are invalid because they're against the public interest. For example, a contract to purchase airline tickets might contain a hold harmless clause. Courts don't all agree whether this clause is valid because it prevents your family from suing the airline should there be an accident. If a hold harmless clause goes against the public interest, a court probably won't enforce it.

Hold harmless agreements are usually ineffective if the other party was negligent. One of the few times a company can waive liability from their own negligence is if it's in the hold harmless agreement and if the other party willingly agreed to it. Even then, a court may not uphold the agreement because it overwhelmingly favors the company.

How to fill out a hold harmless agreement

An HHA requires specific language, which is best prepared by an attorney or an online service provider. Some of the important contents of a hold harmless agreement are:

• The date of the agreement
• The name of the person held harmless or protected, with their address
• The name of the other party to the agreement, with their address
• Details about the activity or event the agreement is about, such as horseback riding or country club membership
• Details about the location and who's holding the activity or event
• The date the agreement takes effect and how long it lasts
• Signatures and the date it's signed

If you're presented with an HHA, consider the consequences of signing it and make sure there's no waiver of the other party's negligence.