A Hold Harmless Agreement (also known as an Indemnity Agreement or a Release of Liability) is a legally binding contract used in England and Wales to allocate risk between two parties by requiring one party (the Indemnifier) to indemnify and hold harmless the other party (the Indemnified Party) against specified claims, losses, damages, liabilities, costs, and expenses. The agreement creates a contractual obligation on the Indemnifier to bear the financial consequences of certain events, thereby protecting the Indemnified Party from potential claims.

Under English common law, indemnity clauses are a well-established feature of commercial contracts and are routinely used across many industries, including construction, events management, professional services, sports and leisure, and property transactions. The principle underlying a hold harmless clause is that one party voluntarily assumes responsibility for losses that may arise from a particular activity, event, or arrangement, even where those losses may have been caused or contributed to by the actions of others.

However, the enforceability of indemnity and hold harmless clauses in England and Wales is subject to important statutory limitations. The Unfair Contract Terms Act 1977 (UCTA) imposes restrictions on the ability of parties to exclude or restrict liability through contractual terms. Section 2(1) of UCTA absolutely prohibits the exclusion or restriction of liability for death or personal injury resulting from negligence. Section 2(2) permits the exclusion or restriction of liability for other types of loss or damage only insofar as the contractual term satisfies the requirement of reasonableness set out in section 11 of the Act. Where the agreement involves a consumer, the Consumer Rights Act 2015 applies in place of UCTA, and any term that creates a significant imbalance to the consumer's detriment may be deemed unfair and unenforceable.

The Contracts (Rights of Third Parties) Act 1999 is also relevant because, unless expressly excluded, third parties who benefit from a contractual term may acquire rights to enforce it. A well-drafted UK Hold Harmless Agreement will always exclude third-party rights under this Act. This template is drafted for use under the laws of England and Wales and incorporates all the key provisions required for enforceability, including the mandatory acknowledgment that liability for death or personal injury caused by negligence cannot be excluded.

A Hold Harmless Agreement is appropriate in a wide range of commercial, professional, and personal situations in England and Wales. You should consider using this agreement whenever one party is engaging in an activity or providing services that carry a risk of loss, damage, or injury, and the other party wishes to protect itself from potential claims arising from that activity.

The most common situations in which a UK Hold Harmless Agreement is used include: events and activities where participants are exposed to physical risks (such as sporting events, team-building activities, adventure experiences, and corporate away days); construction and building projects where a contractor or subcontractor is working on or near the property of the Indemnified Party; professional and consulting engagements where a service provider is performing work that could result in third-party claims against the client; venue hire and facility usage where the venue owner seeks protection from claims arising from the hirer's use of the premises; and commercial arrangements where one party is entering the other's premises or using the other's equipment.

In the employment context, employers may require independent contractors or temporary workers to sign a Hold Harmless Agreement before commencing work, particularly where the work involves hazardous activities. However, it is important to note that under the Health and Safety at Work etc. Act 1974, employers have statutory duties to ensure the health, safety, and welfare of their employees and other persons affected by their undertaking, and these duties cannot be delegated or excluded by contract.

Hold Harmless Agreements are also commonly used in the property sector, for example when a landlord grants a tenant permission to carry out alterations to the premises, or when a property owner allows a third party to access the property for maintenance or inspection purposes. In each case, the agreement serves to clearly allocate risk and ensure that the party undertaking the activity bears responsibility for any losses that arise.

A well-drafted Hold Harmless Agreement for use in England and Wales should contain several essential provisions that reflect the requirements of English law and distinguish it from similar agreements used in other jurisdictions.

The indemnity clause is the central provision of the agreement. It should clearly identify the scope of the indemnity, specifying the types of claims, losses, damages, liabilities, costs, and expenses that are covered. Under English law, indemnity clauses are interpreted strictly, and following the principle established in Canada Steamship Lines Ltd v The King [1952] AC 192, clear and unambiguous language is required if the indemnity is intended to cover the indemnitee's own negligence.

The hold harmless clause works alongside the indemnity to confirm that the Indemnifier will not bring any claims against the Indemnified Party in respect of matters covered by the agreement. It should include a carve-out for losses caused by the Indemnified Party's own negligence or wilful default, as English courts are unlikely to enforce a blanket waiver of all claims without such a limitation.

The statutory limitation clause is essential. Under section 2(1) of the Unfair Contract Terms Act 1977, liability for death or personal injury caused by negligence cannot be excluded or restricted by any contract term or notice. The agreement must expressly acknowledge this prohibition. Under section 2(2), exclusion or restriction of liability for other loss is only effective if reasonable. Any limitation of liability cap must satisfy the reasonableness test in section 11 of UCTA, which considers factors such as the relative bargaining power of the parties, whether the Indemnifier received an inducement to agree to the term, and the availability of insurance.

Insurance provisions are important where the Activity involves material risk. The agreement should specify the type and minimum level of insurance cover required. The assumption of risk clause should clearly state the specific risks that the Indemnifier acknowledges and accepts. The exclusion of third-party rights under the Contracts (Rights of Third Parties) Act 1999 prevents unintended enforcement by non-parties. Finally, the governing law and jurisdiction clause must specify England and Wales to ensure disputes are resolved in the correct forum.