Hold harmless

The Jolly Contrarian’s Glossary The snippy guide to financial services lingo.™ →Go uptown Index — Click the ᐅ to expand: Glossary Tell me more Sign up for our newsletter — or just get in touch: for ½ a weekly 🍺 you get to consult JC. Ask about it here.

hold harmless
/həʊld/ /ˈhɑːmlɪs/ (n.)
pl: holds harmless

Under a hold harmless, one party agrees not to sue the other for losses it incurs in performing the contract.

It is thus a slightly odd undertaking, because as a general proposition, a contracting party would not be liable for losses the other suffers unless they are caused by its breach of contract — that is, a hold harmless isolates a party from a liability it shouldn’t have under a contract in the first place. It may operate to shut down an argument based on an implied term, or prevent a claim in tort arising from faithful performance of the contract that somehow breaches a non-contractual duty of care to the other party (don’t get me started on concurrent liability).

The paradigm case is the parking building that asks its customers to hold it harmless for damage or theft to their vehicles while parked in the parking building.

Not to be confused with an indemnity

When it comes to claims shipped in from third parties that come from faithful performance of a contract with a second party, a hold harmless may — or may not — be subtly different from an indemnity - it’s more like a beneficent inversion of one. Some American juridical minorities have advanced the view that a hold harmless protects against potential losses as well as actual losses, where an indemnity protects against actual losses only.

The JC’s hypothesis — totally unsupported by authority, anything he could find in a textbook or on Google so, yes, he just made up out of whole cloth so use at your peril, but here goes — is that to hold harmless is to defend against behaviour; to take bodily action — while to indemnify is no more than to pay once a cost has actually been incurred. So you might hold someone harmless against suits, claims, actions, proceedings, meaning you must don your armour and get out there and fight the good curial fight, avoiding liability of you can — where an indemnity is no more than an obligation to pony up the readies once the action has been finally lost.

Odd spot

The plural form of “hold harmless” is “holds harmless”. Like “attorneys general”. Because “hold harmlesses” sounds stupid, and “harmless” is an adjective. And yes, I did just make that up.

See also

• Columbina Cavalier, Defence Against Indemnities teacher at St. Crustard’s School for the Perpetually Pedantic in the Opco Boone stories.