This guide is for contract managers, legal professionals, procurement teams, risk managers, compliance officers, business owners, real estate professionals, construction firms, and anyone responsible for negotiating or managing liability-related contracts. Whether you're drafting a hold harmless clause, reviewing an indemnity agreement, evaluating contract risk, or implementing CLM best practices, this article explains how hold harmless agreements work, when they should be used, what provisions they should contain, and how modern contract management software can help organizations reduce legal exposure and strengthen contract governance.
Understanding liability and risk transfer is paramount for any organization managing contracts. A critical instrument that facilitates this mutual understanding is the hold harmless agreement. Encountering a hold harmless clause or document is incredibly common in both the public and private sectors. As such, this blog post aims to demystify the concept of held harmless agreements.
A hold harmless agreement—also known as an indemnity agreement—is a contract in which one party (the indemnitor) agrees to protect the other (the indemnitee) from certain damages or liabilities. Organizations can use these agreements to manage risks associated with various contract obligations and deliverables. Hold harmless agreements can be unilateral contracts (one party is protected) or bilateral contracts (both parties are protected).
Here's a detailed look at some examples where hold harmless agreements would apply.
A hold harmless agreement must begin by clearly identifying all parties involved in the agreement, including the aforementioned indemnitor and indemnitee. Next, parties should unambiguously clarify the specific events, activities, and situations covered by the contract. Taking this further, parties should specify the extent of liabilities or damages from which the indemnitor will protect the indemnitee.
IMPORTANT: It is necessary to clearly define "hold harmless" or "indemnity" in the context of the specific contract. This should include specifics about covering expenses such as settlements, damages, or legal fees. To that end, parties should outline insurance or coverage policies required by the agreement (if applicable).
Parties should also include terms and conditions regarding contract termination, obligations, renewal, and more. Additionally, they should specify which jurisdiction's laws will govern the hold harmless agreement and how disputes will be resolved. Finally, all parties must approve and sign the agreement, including the date of contract execution.
Free Guide: Managing indemnification provisions, obligations, approvals, and compliance requirements becomes easier with a structured contract process. Download our "8 Critical Stages of Contract Management" whitepaper to learn how organizations streamline contract creation, negotiation, execution, and ongoing risk management.
Below are some practical considerations and advice for organizations managing hold harmless agreements.
Hold harmless agreements should use unambiguous and concise language to help avoid potential disputes and misinterpretations. To that end, contract management software can be used to standardize clause language, analyze positive, negative, or neutral sentiment on both sides of a contract, and auto-redline for optimal language. Organizations should consider all potential risks, including those that may not be immediately apparent.
Related Resource: Want to improve clause consistency and reduce contract risk? Download "Contract Lifecycle Management Best Practices" to discover proven strategies for standardizing contract language, improving compliance, and enhancing contract governance.
Organizations should leverage in-house or outside counsel to ensure the hold harmless agreement is legally enforceable. Furthermore, insurance policies should be reviewed to determine applicable coverage or associated limitations. If necessary, organizations should purchase additional coverage to protect against harmful contract risks.
Organizations should consider including bilateral, mutual indemnification clauses to protect both parties from liabilities. Sufficient financial capabilities or insurance specifications should back promises of indemnity.
We recommend contract management software's centralized contract data for terms, insurance specifications, clauses, key dates, financial information, budgets, and more. Additionally, organizations should consider a central negotiation portal in CLM (contract lifecycle management) software to quickly iron out these specifics via in-system chats, email alerts, full audit trails, and version tracking.
Free Whitepaper: Learn how modern organizations accelerate negotiations and maintain stronger contractual protections with our "Contract Management Cookbook," which provides step-by-step guidance for drafting, negotiating, and managing contracts throughout the lifecycle.
Parties should be aware that some US states may not fully enforce insufficiently clear hold harmless agreements. Additionally, hold harmless agreements may be voided if they are found to be the result of fraudulent or coercive behavior on the part of either party. Furthermore, some insurance policies may exclude coverage for damages associated with business contract obligations.
Before implementing new contract processes, download our comprehensive CLM Buyer's Guide to learn what features, capabilities, and considerations matter most when evaluating contract lifecycle management software.
The best way to manage hold harmless agreements, by far, is with contract management software. Organizations can streamline handling hold harmless agreements by automating tasks, facilitating better collaboration, and decreasing risks. Here's how contract management software helps with hold harmless agreements.
To see how you can better manage hold harmless agreements and countless others, book a free demo of CobbleStone Contract Insight® today!
*Legal Disclaimer: This article is not legal advice. The content of this article is for general informational and educational purposes only. The information on this website may not present the most up-to-date legal information. Readers should contact their attorneys for legal advice regarding any particular legal matter.
This blog post was updated on September 14, 2026. It was originally published on April 17, 2025.