Hold harmless, defined as a clause which defines both parties as not responsible for any loss, damage, and other issue from a contract, is common in the business world. A hold harmless indemnity agreement is used when both parties want to limit their liability from a deal which has negative implications for either or both parties.
Hold Harmless Explanation
Hold harmless, explained also as an agreement which limits the risk of doing business, protects a company from liability. Often times companies engage in actions, especially deals between one another, which inherently carry some risk. In such situations one or both businesses may want to include a hold harmless a clause in their contract. This way, the business owners can rest as they are not liable for any damages incurred.
Additionally, a company may enact a hold harmless waiver, to prevent risk, when they have greater bargaining power than another company which they are doing business with. In this situation, though it may not be in the best interest of both parties, the smaller business may want to sign the agreement. With this action they accept the disadvantaged position and continue because the value of the deal is greater than potential loss.
A form of hold harmless letter is present in the personal world too. Often in athletic pursuits, this type of agreement protects the business owner from the damages of injury to a person engaging in the activity. It is of special value to sole proprietors.
Hold Harmless Example
Margaret is a lawyer who works with commercial litigation. Her skills and hard work show in each of the cases she wins. Whether she is met with success or temporary failure there is no question that Margaret has done her best to protect her client.
Recently, Margaret is asked to protect a sole proprietor who owns a Karate class. This man, known to his students as “Sensei Dave”, has been holding his class for several years. Finally, after decades of successful teaching, a student has become hurt in his class. Though this is a natural part of this type of activity, the mother of the student is now suing Sensei Dave.
Margaret finds, to her delight, that Sensei Dave had the student sign a hold harmless form. Though this is not a complete protection, they have been overturned in cases of gross negligence on the part of the business owner. Therefore, Sensei Dave will have a better case in the event that it goes to court.
Margaret continues her preparations with a smile. She knows, thanks to his foresight, that Sensei Dave has a better standing in his unfortunate situation. Margaret will once again do her best to protect her client just as he has done himself.