What It Does
For in-house counsel, two questions control a hold harmless clause: whose negligence it covers and whether governing law permits that allocation. Most courts read indemnify and hold harmless as one obligation, and the Delaware Court of Chancery said so directly in Majkowski v. American Imaging Management Services. California courts give hold harmless a defensive function of its own, so the same two words can carry different weight under different governing law.
A practical test: cover the words hold harmless with your thumb and read the rest of the clause. If the remaining language tells you whose fault is covered, whose fault is carved out, and which state's law applies, the provision is workable. If it leaves those points unclear, revise it before signature.
Moves specified losses and third-party claims from the protected party to the party giving the promise.
Sets whose negligence the promise reaches, which is the line separating broad, intermediate, and limited drafting.
Adds a defensive layer in the states that read hold harmless as a bar on the promisor pursuing the promisee.
Carries a duty to defend, which California Civil Code section 2778 supplies by default on request unless the contract says otherwise.
Runs into state anti-indemnity statutes the moment it reaches the protected party's own fault.
Recent SEC filings show the same phrase doing different jobs: energy management agreements use it for knock-for-knock allocation, construction contracts use it for proportional fault sharing, and Texas leases set it in all capitals.
When You'll See It
Hold harmless language appears wherever one party works around another's people, property, or premises, including construction contracts and subcontracts, commercial leases, equipment-use agreements, services agreements, transportation contracts, event agreements, and purchase agreements.
Broad form: Broad form covers the protected party's own negligence and is often reciprocal in energy and services contracts. Anti-indemnity statutes restrict it, especially in construction.
Intermediate form: Intermediate form covers losses caused in whole or part by the promisor and excludes the protected party's own negligence. California permits it in private construction; Texas and New York limit broader reach.
Limited or comparative form: This form assigns each side its share of fault. It may reduce the promisor's obligation to that share or cap it at gross negligence or willful misconduct, subject to governing law.
Hold harmless letters and standalone agreements: A short agreement can cover site access, early release of goods, an affiliate guaranty, or an event. Define the parties, scope, consideration, and governing law.
Release stacked onto the indemnity: Contracts may stack defend, indemnify, hold harmless, and release. A release extinguishes an existing claim; an indemnity creates a claim later. Keep the functions distinct, as Dresser Industries v. Page Petroleum explains under Texas law.
Drafting risk rises in construction, leases, and site-based work. Review governing law because identical language can be enforceable in one state and restricted in another. Counterparty solvency also limits practical value.
Examples
Dorchester Capital Acquisition Corp. / Dorchester Energy Management LLC
Management Services Agreement
Broad form, reaches the protected party's own negligence
Mutual
2022
"Company agrees to release, indemnify, defend, and hold harmless the DEM Indemnified Person from and against any such cost, expense, or liability, even if caused by the sole or concurrent negligence or other fault of a DEM Indemnified Person or any other indemnitee."
Trinity Mining Group, Inc.
Amended and Restated Data Center Lease
Intermediate form, drafted in capitals for conspicuousness
One-Sided
2023
"TENANT SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS LANDLORD ... FROM AND AGAINST ANY AND ALL CLAIMS, LIABILITIES, LOSSES, DAMAGES, COST OR EXPENSE ... CAUSED IN WHOLE OR IN PART BY ANY NEGLIGENT, STRICT LIABILITY OR OTHER ACT OR OMISSION OF TENANT, ANY PERSON ENGAGED BY TENANT IN CONNECTION WITH THE PROJECT, THEIR RESPECTIVE AGENTS OR EMPLOYEES OTHER THAN THE NEGLIGENT, STRICT LIABILITY OR OTHER ACT OR OMISSION OF A PARTY OR PARTIES INDEMNIFIED HEREUNDER."
Naguabo BESS LLC / SolarMax Renewable Energy Provider, Inc.
Engineering, Procurement and Construction Agreement
Comparative form, obligation reduced by the protected party's fault
Mutual
2025
"Contractor shall defend, indemnify and hold harmless, Owner, its subsidiaries and its Affiliates ... to the extent caused by the acts or omissions, negligence or willful misconduct or fraud of Contractor, its Subcontractors, agents or employees, provided that Contractor's indemnity pursuant to this Section 7.1 shall be reduced in proportion to any acts or omissions, negligence or willful misconduct or fraud of any Owner Indemnified Party that contributed to cause such injury or damage."
OPAL Fuels LLC / Fortistar LLC
Indemnification and Hold Harmless Agreement
Standalone agreement, guaranty backstop
One-Sided
2020
"OPAL shall indemnify and hold harmless Fortistar from and against any and all payments, commitments, liabilities, losses, damages, expenses and costs of whatsoever nature by reason of or arising out of any Guaranty set forth on Exhibit A hereto and any Guaranty that Fortistar may in the future so provide, including all reasonable legal fees and costs in connection therewith."
Hess Corporation / JBH Ventures, LLC
Membership Interest Purchase Agreement
Release stacked onto the indemnity
Mutual
2025
"Buyer will be responsible for, will pay on a current basis, and defend, indemnify, hold harmless and forever release the Seller Parties from and against any and all Claims arising from, based upon, related to or associated with any of the following: ... (C) The Assumed Obligations."
BitMine Immersion Technologies, Inc. / Luxor Technology Corporation
Master Hashrate Purchase and Sale Agreement
Limited form, each side answers for its own conduct
Mutual
2025
"each Party (the "Indemnifying Party") shall defend, indemnify and hold harmless the other Party, its directors, officers, employees, and agents, from and against all claims, demands, proceedings, suits, and actions and all liabilities, expenses, reasonable attorney's fees (including fees and costs incurred in enforcing this right to indemnification), and all costs in connection therewith resulting from the Indemnifying Party's gross negligence or willful misconduct."
Negotiate
You want the promise to reach the risks your counterparty creates, and to survive the statute in the state where the work happens.
Name the covered claims specifically, including bodily injury, property damage, breach of the agreement, and violation of law, so the obligation does not depend on a court reading a bare phrase generously.
Ask for the intermediate form as your opening position in leases and services agreements, since it covers claims your counterparty contributed to even where your own people share some fault.
Add an express duty to defend with counsel you approve, and say the duty applies on tender rather than after a judgment, so the defense is funded while the case runs.
Require insurance that backs the promise, name yourself as an additional insured on the promisor's liability policy, and ask for a waiver of subrogation. The clause is only as good as the balance sheet behind it.
Put the hold harmless obligation in the survival clause and carve it out of the liability cap, since the claims it covers usually surface long after the work ends.
You want the promise tied to your own conduct, sized to the deal, and matched to coverage you already carry.
Push for the limited or comparative form, either as a proportional reduction for the other side's fault or as an obligation capped at your own negligence and willful misconduct.
Carve out the protected party's own negligence expressly, and in Texas-governed contracts state the carve-out in conspicuous type. Dresser Industries v. Page Petroleum treats fair notice as a condition of enforceability.
Limit the obligation to third-party claims and say so, so a commercial dispute between the two of you runs through the breach and remedies provisions instead.
Condition the obligation on prompt written notice, your right to participate in the defense, and your consent to any settlement that admits fault or binds you to future conduct.
Confirm your liability policy covers contractual assumption of another party's liability before you agree to the clause, and price the gap in coverage if it does not.
Hold harmless language rewards a slow read: the words repeat while the fault allocation and governing law move underneath them. GC AI's Playbooks hold your positions on negligence carve-outs, defense triggers, and insurance backing, and GC AI for Word checks the clause inside the redline.
Red Flags
A promise that reaches the protected party's own negligence in a construction contract. California Civil Code section 2782, Texas Insurance Code section 151.102, and New York General Obligations Law section 5-322.1 each void that promise to the extent the statute reaches. What remains is a clause that is partly enforceable and hard to price.
Negligence-shifting language set in ordinary type in a Texas-governed agreement. Ethyl Corp. v. Daniel Construction Co. requires the intent to cover a party's own negligence to be expressed in specific terms, and Dresser Industries adds a conspicuousness requirement. Inconspicuous drafting can fail the fair-notice test.
The words hold harmless standing alone with no indemnity verb and no list of covered claims. That drafting adds nothing in the states that treat the phrase as a synonym, and it creates an unpriced defensive right in California.
Silence on whether first-party claims between the parties are covered. Queen Villas Homeowners Assn. v. TCB Property Management read a general indemnity as reaching third-party claims, so your own direct dispute may fall outside the clause.
A hold harmless promise with no matching insurance requirement, because a defense and indemnity obligation from a counterparty that cannot fund it leaves you paying your own lawyers anyway.
FAQs
This content is for informational purposes only and does not constitute legal advice.
