Definition
This clause releases one party from liability for certain actions, often paired with indemnification to allocate risk. It shields from liability for innocent third-party claims.
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Hold harmless clauses release parties from liability: 'Buyer holds seller harmless from claims relating to property condition after closing.' After closing, seller isn't liable for discovered defects. Hold harmless differs from indemnification: indemnification requires compensation; hold harmless just releases liability. They often work together: 'Seller indemnifies and holds harmless buyer' means seller both pays for and defends claims. Hold harmless provisions are increasingly common in service contracts, construction, and real estate. They're controversial: they can shield parties from liability for their own negligence (often unenforceable) or just shield from innocent third-party claims (usually enforceable). Understanding hold harmless is important: you're being released from liability (good if you're defendant), or releasing other party from liability (risky if they cause problem).
Pro Tip
Understand hold harmless provisions. You're either protected (good) or shielding others (risky).
Example
Construction contract: 'Owner holds contractor harmless from claims by workers injured during construction.' Contractor isn't liable for worker injuries (worker comp handles it).