What is Independent Contractor Hold Harmless Agreement?
An Independent Contractor Hold Harmless Agreement (HHA) is a clause in a contract that is most commonly used in construction contracts.3 min read
2. Key Provisions in a Hold Harmless Agreement
An Independent Contractor Hold Harmless Agreement (HHA) is a clause in a contract that is most commonly used in construction contracts. The purpose of the clause is to release one party from the liabilities or consequences due to the act of another party.
What is a Hold Harmless Agreement?
The HHA is usually arranged by the subcontractor/independent contractor to the builder, contractor, or other related party, insuring against all tasks completed by the subcontractor. An HHA reduces the risk of the subcontractor being sued and, in cases involving injuries, easily allows the subcontractor to pursue a claim for indemnity.
Indemnification and HHAs are even more popular in business contracts. The clauses or elements included in the agreement or contract can work to your advantage, but they can just as easily work against you. The terms "indemnification" and "hold harmless" are constantly used interchangeably, but can't automatically be interpreted to mean the same thing. An HHA may be applied to both contracting parties, or may be unilateral.
The HHA clause should be carefully written and contain specific wording to protect the intended parties in the contract. The agreement must incorporate provisions to reject all claims, losses, expenses, and damages to the contractor if any complications arise in the project. In other words, the contractor assumes all risk and liability that may arise during the course of the project, and indemnifies and protects the independent contractor from incurring any loss. The HHA is usually accompanied with an acknowledgement of risk agreement.
An HHA is sometimes referred to as a "save harmless agreement" because the independent contractor should be reimbursed for any damages or losses that they incur. An HHA isn't treated equally in all jurisdictions. Some take the perspective that an HHA helps address the claims that arise between the contracting parties. Also consider that in some jurisdictions the HHA may only protect the independent contractor from claims issued by an entity or person that's not a part of the agreement.
In certain cases, the HHA will only protect the independent contractor from claims brought on by companies or corporations that are not part of the original agreement. The HHA allows both parties in a contract to limit their legal risks and liabilities. An HHA should be created to the terms in writing so that all parties can be protected from unanticipated legal claims. An HHA should also be used to protect another party from being sued because of the another's actions.
Note, an HHA May also be referred to as a:
- Hold Harmless Letter.
- Hold Harmless.
- Release of Liability.
- Waiver of Liability.
- Hold Harmless Release.
The legality of an HHA will vary by state. Many states will not enforce clauses that are purposely constructed in an overly broad fashion in the attempt to provide umbrella coverage. Some states have laws that restrict the use of HHAs in specific construction scenarios. The use of an HHA may lead to the need of other legal documents, such as:
- Bid Form.
- Mechanic's Lien.
- Real Estate Easement Agreement.
- Quit Claim Deed.
HHAs are utilized in a wide range of business transactions. They may even be used in a medical setting, between a physician and a patient.
Key Provisions in a Hold Harmless Agreement
An HHA should include these key provisions:
- The name and address of the party that will be protected from liability.
- The signature of the party that is signing on behalf of the party that will be protected from liability.
- The name and address of the party providing the protection from liability.
- The signature of the party that is signing on behalf of the party that will be providing the protection from liability.
- The effective date that the agreement begins, or left blank if unsure.
It's important to make sure the contract is written in the format that is applicable to the state in which the party resides, where the activities will take place, or where the property is located. In other words, you'll need to abide by the state law that will govern the terms of the agreement. The typical HHA will have specific language and terms included, and in many situations will be provided courtesy of the contract issuer or insurance company. Every county in a state may have influence over the terms of the agreement, so it's best to verify the contract language and validity of the clause.
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