Defend, Hold Harmless, and Indemnification Agreements
Navigation
The Three "Types" of Hold Harmless Agreements
Most contracts, especially those that include miscellaneous or boilerplate language, include an indemnification provision. Template provisions generally include an agreement for a party to do 3 things:
- Indemnify
- Defend
- Hold Harmless
These 3 things are often lumped into one sentence that reads like this: “Party A agrees to indemnify, defend, and hold harmless Party B for any and all . . . ” However, each one of them is a separate legal concept and has a unique consequence.
To indemnify is to reimburse a party after some form of loss, including judgments or awards assessed against them. In the example above, if Party B got sued and lost, Party A would pay the judgment.
To defend is to pay for and provide the legal defense for a case. Again, if Party B got sued, Party A would retain an attorney and defend Party B in court.
To hold harmless is to waive potential claims against a party preemptively. If Party B commits misconduct, such as a breach of contract, Party A will not be able to sue because he agreed to hold Party B harmless.
What is the purpose of a hold harmless or indemnification agreement?
Hold harmless or indemnification agreements shift or reduce the liability of the parties. The purpose of indemnification is to allow two parties to conduct business together without being held liable for the occurrences outside of a party’s performance. The most common occurrences addressed are those under the influence or control of the other party.
How does a hold harmless or indemnification agreement work?
For example, let’s say Party B is an IT network security provider and Party A is a client. Although Party B is providing security systems to prevent hackers from accessing Party A’s network, Party A can always receive the email “your Facebook business page has been flagged for deletion” and click the link. In this case, Party A should hold harmless Party B because they didn’t do anything wrong. Furthermore, if the hackers accessed Party B’s data through the breach and caused harm to Party B, Party A should indemnify Party B for causing the harm.
How do you write an indemnification or hold harmless agreement?
To write an indemnification agreement, you need to include specific items of concern and a catch-all statement. Specific items will be any action of the other party you can think of that can cause you financial loss or legal liability. Catch-all statements will cover actions you don’t specifically identify but fall within general parameters, such as breach of contract or negligence. You can use a catch-all statement as a preamble for the specific items, such as “any action or inaction of Party X that causes harm to Party Y, including but not limited to . . .”
Do these agreements hold up in court?
Yes they do. You should always have an indemnification protecting you in a contract. The only way to avoid these agreements is to void the contract or strike the provision for being unconscionable.
What is an exculpatory clause?
An exculpatory clause is the same as a hold harmless agreement. Exculpatory clauses waive your right to sue the other party for the causes of action identified in the clause.
About
Attorney Collier started his own law firm straight out of law school and has been practicing law in Ohio for 5+ years. During that time, Joe focused on business law and litigation, gaining some exposure to intellectual property law. While running his firm in 2021, Joe decided to go back to school and get his patent license. Since then, Attorney Collier has been focusing on protecting innovators and entrepreneurs through his expertise in intellectual property and business law.