Hold Harmless Clause

The hold harmless clause is an interesting part of a contract, if of course, two parties choose to agree on it. It solidifies the security of one party, while ensuring the second party does their job right.

Hold Harmless Clause

When two parties sign a contract document, they are basically agreeing to stand by all what is given in the contract. The content of the contract states the conditions agreed upon by the two parties. For example, let us take the example of a contract where there is an agreement to buy goods. Now the contract will specify all the details of the sale of goods from the point of view of the seller, the date of delivery, the price agreed, the exact specification of goods, etc. When the buyer and seller write a business contract and sign it, then it signifies that they agree to follow the terms given in the contract.

It is one of the clauses that may be inserted by either one of the two parties to the contract. A hold harmless clause means that in case of any loss for one party during the course of completion of the contract, both parties agree that they will not hold the latter party responsible for the loss and will basically indemnify the latter from any losses. That is to say that the former will bear any loss arising due to operations.

Clause Example

Let us explain this concept of the hold harmless clause with the help of an example. Now suppose Mr. Jones is in the construction industry. He wants to assign Mr. Smith, a reputed architect to build a tower on his behalf. So, he enters into a contract with Mr. Smith to build the tower. The specifications of the tower, the approximate construction time, the approximate cost of building and the architectural fees to be given to Mr. Smith are agreed between the two of them. But Mr. Smith, being a reputed, well sought after architect agrees to enter into this contract on one condition: the hold harmless clause.

How does the clause work here? Now, if during the construction of this tower, there is a fire and some part of the constructed tower gets burned down, then the clause protects the architect from being sued for the arising losses. The clause in the contract clearly states that the architect cannot be sued for or charged for any losses that arise during the process of construction and that Mr. Jones indemnifies Mr. Smith from all the ensuing losses.

Clause Sample

Taking the example given below, here's the template.

"M/s Jones Constructions, its successors and assigns, hereby agrees to save and hold harmless the M/s Smith Architects, any of its employee from all cost, injury and damage incurred by any of the above, and from any other injury or damage to any person or property whatsoever, any of which is caused by an activity, condition or event arising out of the performance, preparation for performance or nonperformance of any provision of this agreement by M/s Smith Architects. The above cost, injury, damage or other injury or damage incurred by or to any of the above shall include, in the event of an action, court costs, expenses of litigation and reasonable attorneys' fees. This save harmless clause is not intended to indemnify against any cost or damage, or portion thereof, caused by M/s Smith Architects". IN WITNESS WHEREOF, the parties hereto have hereunto set their hands this _______________day of _______________________, 20_______. ________________________________________ RESPONSIBLE PARTY SIGNATURE

It is a very powerful clause, keeping the signing party protected from any damages that occur in its name. I hope now this matter is sufficiently clear!