Hold Harmless Agreement (New Zealand)

A Hold Harmless Agreement in New Zealand releases one party from liability for specified risks or claims in exchange for participation or settlement, enforceable so far as permitted by the Companies Act 1993.

Hold Harmless Agreements are governed by the Contract and Commercial Law Act 2017 (CCLA 2017) and the common law of contract in New Zealand. The core obligation — the indemnity — is a contractual promise by the indemnifying party to make good any losses suffered by the indemnitee within the scope of the agreement. This promise must be supported by consideration (which may be the right to perform the relevant activity or the payment of a contract price) and must satisfy the other requirements of a valid contract under the CCLA 2017.

Hold Harmless Agreements are widely used in construction and property in New Zealand. Head contractors typically require subcontractors to hold them harmless from claims arising from the subcontractor's work on site. Property owners require contractors to hold them harmless from third-party claims arising from construction activity on their property. The Construction Contracts Act 2002 governs the payment regime for construction contracts in New Zealand but does not prevent the parties from agreeing on risk allocation through Hold Harmless Agreements.

Hold Harmless Agreements are also used in professional services, event management, commercial property arrangements, and equipment hire, wherever one party's activities create a risk of claims against another party.

A unique feature of New Zealand law that affects every Hold Harmless Agreement is the Accident Compensation Act 2001 (AC Act 2001). New Zealand's thorough, no-fault accident compensation scheme through ACC covers personal injury caused by accident. The right to ACC cover is a statutory entitlement that cannot be waived or indemnified away by private agreement. A Hold Harmless Agreement in New Zealand must therefore expressly exclude ACC personal injury claims from its scope.

The Health and Safety at Work Act 2015 (HSWA 2015) also affects the operation of Hold Harmless Agreements. The HSWA 2015 imposes primary duties on persons conducting a business or undertaking (PCBUs) to confirm the health and safety of workers and others. A Hold Harmless Agreement cannot override the indemnifying party's HSWA 2015 obligations — the statute cannot be contracted out of. However, a Hold Harmless Agreement can effectively allocate the commercial cost of HSWA 2015 compliance failures (in the form of civil claims) between the parties.

To be commercially meaningful, a Hold Harmless Agreement should be backed by appropriate insurance. The indemnifying party's public liability insurance provides the practical means of meeting the indemnity obligation if a claim arises.

A New Zealand Hold Harmless Agreement is appropriate in a wide range of commercial, construction, and professional service situations where one party's activities create a risk of claims against another party, and the parties wish to formally allocate that risk by agreement.

You need a Hold Harmless Agreement when: you are engaging a contractor, tradesperson, or service provider to carry out work on your property and you want protection from third-party claims arising from their work; you are a subcontractor asked by a head contractor to sign a hold harmless clause as a condition of being engaged on a construction project; you are organising a commercial event or exhibition on property owned or managed by a third party, and the property owner requires a hold harmless agreement as a condition of access; you are granting a licence to use your intellectual property, equipment, or facilities, and you require the licensee to hold you harmless from claims arising from their use; you are entering into a joint venture or partnership arrangement and the parties wish to allocate liability for specific activities between them; or you are a franchisor requiring franchisees to indemnify you against claims arising from the franchisee's operation of the franchise.

Hold Harmless Agreements are also used in the context of property access — landowners who permit third parties to access their property for specific purposes (filming, events, surveying) typically require Hold Harmless Agreements as a condition of access. Rural landowners in New Zealand frequently use Hold Harmless Agreements for hunting access, tramping access, and similar rural activities.

In New Zealand's construction sector, hold harmless clauses are standard in subcontracts and are a key risk management tool for head contractors. The New Zealand Standard Construction Contract (NZS 3910) and the Standards New Zealand subcontract agreement (NZS 3915) both contain risk allocation and indemnity provisions, but project-specific Hold Harmless Agreements may provide more tailored protection.

For high-value projects or complex arrangements, legal advice from a New Zealand lawyer is recommended to confirm the Hold Harmless Agreement adequately reflects the risk allocation agreed between the parties and is appropriate for the specific activity or project.

A thorough New Zealand Hold Harmless Agreement should include several essential provisions to be legally effective and commercially useful.

The parties clause identifies the indemnifying party (the party providing the protection) and the indemnitee (the party being protected), with their full legal names, NZBN numbers (for companies), and addresses.

The purpose and activity clause describes the project, activity, or commercial relationship that gives rise to the need for the hold harmless protection. Clearly describing the activity grounds the indemnity obligation and limits potential disputes about whether a particular claim falls within the agreement's scope.

The indemnity type clause specifies whether the indemnity is broad (covers claims arising from the indemnifying party's own negligence), intermediate (covers third-party claims except those arising from the indemnitee's own negligence), or limited (covers only claims arising from the indemnifying party's acts or omissions). The choice of indemnity type significantly affects the risk allocation and should be carefully considered.

The covered liabilities clause describes with specificity the types of claims, losses, and costs covered by the indemnity — such as property damage, personal injury (excluding ACC claims), third-party claims, clean-up costs, or legal costs. The more specific the description, the less room for dispute.

The insurance clause requires the indemnifying party to maintain appropriate insurance (e.g. public liability insurance at a specified minimum amount) during the term of the agreement, to provide evidence of that insurance on request, and to notify the indemnitee of any cancellation or lapse.

The ACC exclusion clause expressly excludes ACC personal injury claims from the scope of the indemnity. This is mandatory under New Zealand law.

The duration clause specifies when the agreement begins and ends. The indemnity obligations should survive the expiry of the agreement for claims arising from events that occurred during the term.

The dispute resolution clause provides for good-faith negotiation and, if unsuccessful, mediation through AMINZ before commencing litigation — consistent with established standards in New Zealand commercial dispute resolution.

The governing law clause confirms that the agreement is governed by the laws of New Zealand, including the CCLA 2017. The forms-legal.com Hold Harmless Agreement (New Zealand) provides a ready-to-use template that meets New Zealand legal requirements.