A hold harmless agreement clause in a contract document should have a specific language to protect the contractor or the intended parties. The agreement must include provisions to neglect any kind of claims, damages, losses, expenses or any other cause of action to the contractor, if any type of problem or dispute arises in the construction project.
The hold harmless agreement protection will vary depending on the jurisdiction that the contract is being executed. In some cases, the hold harmless agreement will protect the contractor from claims brought by corporations or companies not forming part to the agreement.
Three Basic Types of Hold Harmless Agreements
There are three basic types of Hold Harmless Agreements in the construction industry: Broad Form, Limited Form and Intermediate Form.
- Intermediate Form
The subcontractor being insured, assumes all related liability for accidents, its own negligence, general contractor negligence and the combined negligence between contractor and subcontractor. This is not the recommended form of agreement due to its broad responsibility terms, and many jurisdictions prohibit this form of hold harmless agreement. In some cases to validate this type of agreement, the subcontractor must finance its own liability with an additional insurance policy.
Under this form of agreements the sub contractor assumes all liability for accidents and negligence. The subcontractor is responsible for his related actions and will not be held accountable for the general contractor's accidents or negligence. This is one of the most common used types of hold harmless agreement. It is not dependent on whether it was subcontractor's fault or not, it only depends on whom was executing the accident or who was acting in a negligent way. In the case that both parties were negligent, the subcontractor will be held responsible for his actions and will be liable for his actions and omissions.
In a hold harmless limited-form agreement, the subcontractor will be held accountable only for the accident or negligence but on a limited form. The subcontractor will assume liability only to the proportional part of what was his responsibility. This type of agreement will limit the liability of the subcontractor only to his responsibility, and will include other, under their respective hold harmless agreements for their corresponding part of the accident or negligence.