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Hold Harmless Clause

DEFINITION

Statement in a contract that explicitly states that a party, including a person or organization, is not liable for damages or injuries caused to the other party of a contract. Such a clause is typically used when the party performing a task wants to avoid liability for activities that present a risk of injury or harm.

EXPLANATION

A privity of contract establishes that only the parties within an agreement can hold each other liable and/or sue each other. Parties outside of the listing agreement have no legal power. However, typical listing agreements possess a hold harmless clause, whereby both parties agree not to sue each other. This bars an agent or a principal from recovering for damages, losses, or other liability.

Examples of Hold Harmless Clause

One example of a hold harmless clause is an individual going to a race car track with some friends  in order to test out the speed and quickness of their vehicles. The outdoor facility where this race track is located has a contract which requires all visitors sign prior to racing. The hold harmless clause is viewed more as a non waiver agreement in such a scenario, in the case where a visitor suffers injury of any kind or even death. Such an agreement will prevent lawsuits as the other party both acknowledges and takes full responsibility if anything where to go wrong.

Another example is an individual going to an amusement park. Many of the rides at a theme park can be hazardous and can lead to injury and fatality if there were ever a malfunction.

In certain instances both parties may request signatures pertained to this specific clause. This comes to be known as a reciprocal clause, which states both sides have agreed to not hold either side responsibility for any liability related causes.

Hold Harmless Clause & Legality

Although a hold harmless clause is commonly used and can be an effective when seeking to avoid liability when another party entertains ones services, this clause is not 100% worry free when trying to protect oneself. In certain states a hold harmless clause is not entirely valid. If the clause agreement drafted by a certain individual or entity comes off to be vague in any form, such an agreement will thereby not be granted any waiver in accordance with some of these select state laws. Therefore any legal status or case In relation to a hold harmless clause is not imposed or brought upon on a federal level, but rather a state to state legal basis.

Suggested Usage

Many legal analysts and experts will recommend an individual exercise the use of a hold harmless agreement under the following framework.

Renting or any usage ozones property or home.

Fitness facility where physical activity can lead to injury.

Hazardous activity (ex. sky diving/construction work etc.)

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