Key Takeaways

  • A hold harmless agreement in Texas transfers risk from one party to another, protecting against liabilities.
  • These agreements are widely used in construction, real estate, sports, and service-based businesses.
  • Texas distinguishes between broad, intermediate, and limited forms of indemnity.
  • Enforceability can depend on how well the contract is drafted and whether it complies with Texas statutes like the Texas Anti-Indemnity Act.
  • Including specificity, clear intent, and insurance language is critical to a valid hold harmless agreement in Texas.
  • There are three types of clauses: unilateral, reciprocal, and mutual.
  • UpCounsel can help you connect with experienced attorneys to ensure your agreement is enforceable under Texas law.

A hold harmless agreement Texas is a contract that releases one or both involved parties from making any legal claims within the state of Texas.

What Is a Hold Harmless Agreement?

This agreement must be signed by both contracted parties and release at least one of the parties from the risk of legal claims. A hold harmless agreement is most commonly used for one party to agree not to take legal action against the other for damages, losses, or expenses that result from activity or a transaction between them. This agreement outlines the transaction or activity for which the other party cannot take legal action.

A hold harmless agreement filed in Texas could apply to both parties in a contract or simply apply to one. This contract clause is often used in construction contracts as a way to release one of the involved parties from any liabilities or consequences that result from the actions of the other party. In this scenario, the subcontractor would likely provide a hold harmless agreement to the builder, contract, or other related professionals on the job to provide insurance for all work that is done by the subcontractor.

The agreement's provisions minimize the risk of being sued and permit the involved parties to file an indemnity claim if the subcontractor or employees of the subcontractor become injured while on the job. If you allow someone to use your property or hire them to perform services for you, using a hold harmless agreement would protect both of you in terms of legal liability.

A release of liability form protects businesses, entities, and individuals from being held financially or legally responsible for any actions that occur as the result of physical risk. A business should take precautions to protect its employees, but these documents can offer some legal protection. The release of liability form will not offer any protection to an entity, individual, or business if an injury occurs as the result of negligence. If a business requires any type of physical activity, whether by its employees or its customers, using a release of liability form could protect the company from potential legal action.

For example, a construction business requires a high volume of physical labor from its employees. An employee of that construction business could become injured while lifting heavy materials. Since this employee was injured while performing their normal job responsibilities and duties, the company likely wouldn't be held responsible, as long as the employee had signed a release of liability form.

However, if the injury resulted from another employee using equipment inappropriately, this could be considered negligence. The release of liability form would no longer apply to the business. Another example is if the employee was injured while using a piece of faulty machinery that should have been repaired or replaced.

Types of Hold Harmless Agreements in Texas

In Texas, hold harmless agreements can take several forms depending on the scope of protection:

  • Broad Form Hold Harmless: This clause requires one party to assume all liabilities, including those caused by the indemnitee’s own negligence. Note: Broad clauses are typically unenforceable in Texas construction contracts due to the Texas Anti-Indemnity Act.
  • Intermediate Form Hold Harmless: This clause holds one party responsible for all liabilities except those arising solely from the indemnitee’s own negligence. This form is more likely to be upheld in Texas courts.
  • Limited Form Hold Harmless: The indemnitor is responsible only for damages they directly cause. This is the narrowest and most enforceable form in Texas.

These distinctions are especially important in industries like construction, where the legal consequences of a poorly drafted clause can be significant.

When to Use a Hold Harmless Agreement

If any of the following apply, a hold harmless agreement could be useful:

  • You want to avoid legal action against an individual based on your actions.
  • Someone is using your facility or property and you want to avoid being held responsible for liabilities or damages caused by that person.
  • A company or individual is providing services on your behalf and you want to avoid being held responsible if a third party is injured.

You might also hear this type of agreement referred to as a:

  • Hold harmless release
  • Release of liability
  • Hold harmless
  • Waiver of liability
  • Hold harmless letter

Common Situations for Using a Hold Harmless Agreement in Texas

While construction is a common context, there are many other scenarios in Texas where a hold harmless agreement is advisable:

  • Real estate transactions (e.g., allowing contractors onto a property)
  • Special events hosted on private or rented property
  • Sports or recreational activities like gyms, personal training, or martial arts
  • Independent contractor arrangements where third parties may face risks
  • Equipment rentals where users agree not to sue for injuries resulting from use

In each situation, the goal is to clearly assign risk and prevent costly legal disputes over liability.

Information Needed for Creating a Hold Harmless Agreement

As you create your hold harmless agreement, make sure it includes some pertinent information.

Some of the required details include:

  • Definition of terms
  • Failure to defend
  • Indemnification terms
  • Claim notice
  • Indemnification exceptions and authorization
  • Assumption of defense
  • Liability
  • General provision
  • Payment
  • Insurance
  • Subrogation
  • Consent and settlement (include terms for both involved parties)
  • Expenses
  • Notices
  • Duration
  • Obligations and rights (for both involved parties)
  • Jurisdiction
  • Amendments
  • Cooperation
  • Governing law
  • Enforcement

Include the name and address of the party who will receive protection from liability based on the terms. The specific person signing the agreement is called the individual signing on behalf of the protected party. Include the name and address of the party who is providing liability protection as well. This is the other person who will sign the agreement.

Legal Requirements and Enforceability in Texas

A hold harmless agreement in Texas must comply with specific legal standards to be valid and enforceable:

  • Clear Language: The agreement must explicitly state the scope of indemnity and identify which party is being protected.
  • Conspicuous Terms: Texas courts may require indemnity provisions to be clearly noticeable (e.g., bolded, capitalized, or separately signed).
  • Consideration: Like any contract, there must be an exchange of value or benefit to make the agreement binding.
  • Public Policy Compliance: Agreements that attempt to indemnify a party for intentional misconduct or gross negligence are generally unenforceable.
  • Texas Anti-Indemnity Act: Applies to certain construction contracts and limits indemnity clauses, especially when indemnifying for another party’s negligence.

Before finalizing a hold harmless agreement in Texas, it's wise to have it reviewed by a legal professional to ensure it aligns with state laws.

Insurance Considerations for Hold Harmless Agreements

Including insurance provisions in your hold harmless agreement can strengthen the protection it offers. Key elements include:

  • Requirement to Maintain Insurance: Specify the types and minimum amounts of insurance each party must carry (e.g., general liability, workers' compensation).
  • Additional Insured Status: Requiring one party to list the other as an additional insured on their policy can provide added protection.
  • Proof of Coverage: The agreement can mandate regular proof of insurance through certificates or endorsements.
  • Waiver of Subrogation: This provision prevents the insurer from seeking reimbursement from the other party after paying a claim.

These provisions help ensure there is actual financial backing for the indemnity being promised, reducing the risk of unpaid liabilities.

Frequently Asked Questions

1. Are hold harmless agreements enforceable in Texas? Yes, but they must be clearly written, comply with state laws, and avoid indemnifying against gross negligence or intentional acts.

2. What industries commonly use hold harmless agreements in Texas? Construction, real estate, event planning, recreational sports, and service providers frequently use them.

3. Can I write my own hold harmless agreement in Texas? While templates are available, it’s best to consult an attorney to ensure the agreement complies with Texas law, especially in regulated industries.

4. What is the Texas Anti-Indemnity Act? This state law limits the enforceability of indemnity clauses in construction contracts, especially those that indemnify a party for its own negligence.

5. What’s the difference between indemnification and a hold harmless clause? They are often used together. "Indemnification" involves reimbursing for losses; "hold harmless" means not holding the other party legally responsible.

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