If you run or own a business that involves physical activity, such as a gym, you may want to consider utilizing a hold harmless agreement for protection from any unexpected liability charges. If you want to know more about them or how to write a hold harmless agreement, you’ve come to the right place. 

What Is a Hold Harmless Agreement?

If you run a high-risk business, you may have a clause in your legal contract releasing you from financial or physical damage liabilities. This clause is known as a hold harmless agreement. In other words, this legal document releases the main party from any liabilities that could result in legal charges from a second party.

Let’s say you own or run a gym. Injuries occur all the time at gyms. That’s why it’s important to protect yourself and your business from any responsibility related to the risks involved in using a gym. 

When a party signs this document, they agree not to hold your business responsible for any mishap during a specific service. In addition, a business with a hold harmless agreement does not get sued often, reducing the costs related to legal consultancy.

Gym

A hold harmless agreement also works as an excellent promise during repair projects. It can save you from any legal actions in situations where a contractor may experience injuries while working in your house.

This agreement is either reciprocal or unilateral. The unilateral contracts protect one party only, while with a reciprocal one, both parties waive any liability against the other.

There are three primary types of hold harmless agreements.

  • A general agreement only protects a party for specific activities. For instance, the contract may not be helpful in a sponsored event.
  • Services-related hold harmless agreements protect against liabilities incurred during certain services.
  • Lastly, the “use of property” category protects home and property owners against liabilities that may arise due to the actions of a party renting the property.

There are also three types of hold harmless agreements, specifically in the construction industry. These are limited, intermediate, and broad agreements.

A limited type means that the subcontractor is liable for only limited actions, while a broad agreement makes the subcontractor responsible for every liability.

What Is a Hold Harmless Agreement Used For?

A hold harmless agreement is also often used by small businesses. This clause can limit liabilities while leasing or renting your properties and hiring a contractor to perform construction work.

Since small ventures don’t always have the money to pay off uncertain liabilities, a hold harmless agreement clause works as an excellent savior.

If you have an apartment lease, it may include a hold harmless clause. The clause usually states that the landlord isn’t responsible for the tenant’s damage.

Similarly, when hiring a roofer, a homeowner may request a hold harmless clause for situations in which the roofer might fall.

Roofers

While a hold harmless agreement has many uses, it may not always be effective. For example, it won’t save you from liability or lawsuit if you live in certain states that don’t consider this clause.

In addition, this legal document is often considered void if the other party successfully proves that they were forced to sign the clause. 

What Are the Pros and Cons of Hold Harmless Agreements?

Here are some positives and drawbacks of a hold harmless agreement.

Pros

  • It limits legal liabilities and reduces law-related expenses.
  • Small businesses can worry less about being sued.
  • With a hold harmless agreement, you can get insurance for certain events and activities easily.
  • This document helps maintain your business’ reputation by reducing the number of lawsuits associated with it. 

Cons

  • If the signer claims to be forced to sign the agreement, a judge may void that agreement.
  • Unclear agreements are usually not honored by most states.
  • These documents often cover claims linked with a contract, regardless of their association with your business.

How to Write a Hold Harmless Agreement

When drafting a hold harmless agreement, it is best to consult an attorney. It is imperative to write the agreement in a certain legal language. A judge can overturn an unclear and poorly written waiver.

Here are a few components of a hold harmless agreement:

  • Date
  • The name and address of the person held harmless
  • The name and address of the other parties involved
  • All the details of the event or activity covered by the agreement
  • Location details
  • The duration of the agreement and its date of effect
  • Signatures and signing date

You or your partner should never sign this agreement without consulting a lawyer. Make sure to read every line carefully and take your attorney’s advice before signing the clause.

Final Thoughts

If you run a small business or a venture involving risky activities, it is best to get a hold harmless agreement signed by all the parties involved. This clause protects you from future liability and saves you from unnecessary legal costs.

It is an important clause that can save you from lawsuits and may also help you maintain a good reputation for your business. If you want to create a paperless agreement with a hold harmless clause, PandaDoc Waivers is a great option to explore. Owing to the app, you can keep your waivers signed and managed for free. You can experience a fast process that requires minimal maintenance, so you can download and store your waivers easily.