Hold harmless agreements are a key part of doing business in the United States. The agreements limit the legal liability of one party in an arrangement, usually in the form of an indemnification agreement where one party agrees to protect the other from potential legal claims. These agreements have become increasingly important for businesses of all sizes as companies take every available legal measure to ensure their people and property remain safe.

If you're a business owner looking to get started on a hold harmless agreement, there's a lot to consider. Knowing what the agreement entails and understanding the possible consequences it might trigger for your business is essential, especially when it comes to local regulations. Here, we will provide an overview of what a hold harmless agreement is and the important elements you should consider before signing one.

What Is a Hold Harmless Agreement?

A hold harmless agreement is a contract between two parties that shields one of the parties from potential losses or other harm arising from the actions of the other. The protected person, known as the “indemnitor," is held harmless from all potential liabilities caused by the party with which they are in an agreement, which is referred to as the “indemnitee.”

For businesses, a hold harmless agreement can be used to limit the risks and protect from nonviolent losses. When enacted, the indemnitor agrees to take on potential liabilities, regardless of who is at fault, and cover any damages resulting from the actions of the indemnitee.

What Qualifies as a Hold Harmless Agreement?

Any agreement between two parties that serves as a guarantee of protection from legal liabilities or from extraordinary losses can legally qualify as a hold harmless agreement. The agreement should provide explicit instructions for how the protected party can be indemnified from losses.

A hold harmless agreement can also include provisions for what happens when a breach of the contract occurs and how the indemnitee will be compensated in the event of a financial loss. This agreement can also include clauses that allow the indemnitee to collect damages from the indemnitor should a breach occur.

When Should a Business Owner Use a Hold Harmless Agreement?

Hold harmless agreements are commonly used to protect businesses in a variety of circumstances, such as:

When leasing or leasing out land or property.

When providing services, such as construction, installation, or assembly.

When entering into a contractual agreement, such as a franchise or sale agreement.

When hiring a freelancer or contractor.

When engaging in regular business activities or partnerships.

Business owners should make sure that their contracts protect their interests and properly explain the indemnitee's rights and obligations under the agreement.

Where to Find a Hold Harmless Agreement

In most cases, finding a hold harmless agreement is as simple as consulting with a lawyer or looking online for a template. But it is important to make sure any agreement is tailored to the specific needs of the parties involved and reflects local regulations and laws.

For businesses based in Chicago, UpCounsel is a great resource. Their network of experienced lawyers provides access to high-quality attorneys on-demand, along with profiles of their online attorneys to help you find the best fit. UpCounsel also offers business attorneys with an average of 14 years of experience, meaning you'll be able to view their full background before making a decision.

Points to Remember Before Signing a Hold Harmless Agreement

Before signing a hold harmless agreement, business owners should make sure they understand the following key points:

The scope and limitations of the agreement.

The terms and conditions related to how damages are compensated.

Strategies for negotiating favorable conditions in the agreement.

How disputes are handled.

Which liabilities are covered and which are not.

Any requirements for insurance or indemnification agreements.

These points are critical to consider when drafting a hold harmless agreement and should be taken into account by each party prior to signing.

Closing ideas

Hold harmless agreements are a key part of the legal landscape for doing business in the United States. By understanding what they entail and considering the potential liabilities and coverage, businesses can draft agreements that best protect their interests and ensure a degree of safety should a dispute occur. For those in Chicago looking for experienced counsel, UpCounsel's network of lawyers is an ideal way to find the right attorney or legal team for the job.


Hold Harmless Agreement,

Business Owner Agreement,

Indemnification Agreement