Key Takeaways

  • A hold harmless agreement NC helps transfer liability from one party to another, and is commonly used in construction, real estate, and event management.
  • North Carolina law prohibits indemnification clauses that cover a party’s own negligence in construction contracts.
  • Hold harmless clauses can be broad, intermediate, or limited, each assigning different levels of liability.
  • These agreements are often accompanied by insurance requirements for added protection.
  • Proper language, legal review, and understanding of the parties involved are essential to ensure enforceability.
  • Templates exist, but customization and legal advice are critical for NC-specific needs.

A hold harmless agreement NC is a legal agreement in which one party promises not to hold the other party liable for any potential damage or injury.

What Is Indemnity?

An indemnity is a statement that you agree to pay any amount which someone else might be legally bound to pay. It can often prove to be a costly item.

Usually, indemnity provisions are part of a contract and are governed by contract rules. For instance, if you have agreed to pay for the builder's liabilities to others, you may be legally held liable to pay them.

In North Carolina, the applicability of indemnity provisions is subject to certain exceptions. For instance, you cannot claim indemnity against your own negligence. If an indemnity clause in a contract seeks to indemnify a party against its own negligence, such provision would be against public policy, and North Carolina state law prohibits such indemnification.

According to Chapter 22B-1 of North Carolina General Statutes, any agreement related to design, construction, repair, demolition, excavation, maintenance, etc. that promises to indemnify the promisee (or its agents, employees, contractors, etc.) against any liability arising from injury or damage resulting from partial or complete negligence the promisee (or its agents, employees, contractors, etc.) is against public policy, and hence, void and unenforceable. However, this restriction does not apply to agreements where the promisor agrees to indemnify the promisee against the liability for damages arising out of sole negligence of the promisor.

Further, if an invalid portion of a construction indemnity clause can be separated from the main agreement, the rest of the agreement will continue to remain valid and enforceable.

All indemnity provisions are not the same. Some of them may also include attorney fees as part of the indemnified liability, while others may expressly exclude such expenses. Similarly, some provisions may include a duty to defend the promisee, while others may remain silent on this issue. The language of an indemnity provision is extremely important and you should discuss it with your construction lawyer.

Common Uses for a Hold Harmless Agreement in NC

Hold harmless agreements in North Carolina are widely used in various industries to protect one party from legal liability caused by another party's actions. Here are common scenarios where these agreements are applied:

  • Construction Projects: Contractors and subcontractors often use these to shift liability for on-site accidents.
  • Property Rentals: Landlords may require tenants or event hosts to sign hold harmless clauses to avoid liability for injuries.
  • Event Hosting: Venues and organizers use them to prevent claims from attendees or third parties.
  • Equipment Lending: When tools or machinery are loaned, these agreements shield the lender from responsibility for misuse or injury.
  • Volunteering and Recreational Activities: Nonprofits and sports organizations may use them to mitigate risk associated with participation.

Effectiveness of a Hold Harmless Agreement

The effectiveness of a hold harmless agreement depends upon the language of the agreement and the circumstances of the case. Even if the agreement may not protect you against all types of potential injuries, there might be a benefit attached to it. Let's say for instance you are a homeowner, and you have got your liability for an injury covered under an indemnity agreement. You will still be under an obligation to provide a safe workplace.

Note that a hold harmless agreement is different from a waiver of liability, which depends upon whether you have any control over the work.

Types of Hold Harmless Agreements

Hold harmless agreements in North Carolina generally fall into three categories, depending on how much liability the promisor agrees to accept:

  • Broad Form: The promisor agrees to hold the promisee harmless for any and all liabilities, including those arising from the promisee’s own negligence. Note: This form is generally unenforceable in North Carolina when used in construction contracts due to public policy restrictions.
  • Intermediate Form: The promisor accepts liability for negligence shared between both parties but not if the promisee is solely at fault.
  • Limited Form: The promisor only takes responsibility for their own negligence or actions.

Understanding these distinctions is essential when drafting or signing a hold harmless agreement in NC to ensure it aligns with state laws and practical risk management needs.

Negotiating an Indemnity, Hold Harmless, or Assumption of Liability Clause

To completely remove an indemnity or a hold harmless clause, you can state in the agreement that the state of North Carolina prohibits contract provisions that seek to limit the liability of the other party. You may want to mention the North Carolina Tort Claims Act under which a state entity is prohibited from waiving its sovereign immunity except under certain circumstances.

If you cannot negotiate a clause on the above lines, the other way around is to limit the indemnity clause by adding something like “only to the extent and manner provided by North Carolina law.” However, this approach is less favored than the above one.

Important Clauses to Include in a Hold Harmless Agreement

A well-drafted hold harmless agreement should be detailed and customized to the specific situation. Essential clauses include:

  • Scope of Indemnification: Clearly state what liabilities are covered, including property damage, personal injury, and legal fees.
  • Duration of Agreement: Specify how long the indemnity obligation remains active (e.g., during and after contract execution).
  • Governing Law: Indicate that North Carolina law governs the agreement to avoid conflicts in interpretation.
  • Insurance Requirements: Often, the promisee requires the promisor to carry liability insurance to back the indemnity promise.
  • Notification of Claims: Detail the timeline and process for notifying the indemnifying party if a claim arises.
  • Defense Obligations: Clarify if the promisor is responsible for defending the promisee in legal proceedings.

Each of these clauses strengthens the agreement's enforceability and protects both parties from misunderstandings.

Hold Harmless Agreement Sample

This is a Hold Harmless Agreement between ____________________ (the name of the promisor) and _______________ (the name of the promisee) for use of items bought from donations, such as wheelbarrows, ladders, leaf blowers, power washers, or some other item that may be used for personal use by _______________. These items may be used without any charges.

1. In consideration for the permission to use various items given to us, I release and waive ____________ (name of the promise), his agents or employees (hereinafter referred to as Releasees) from all claims, liabilities, and causes of action related to any damage, loss, or injury sustained from using such items.

2. I am fully aware of the risks associated with the use of the said items, and I am using such items voluntarily out of my free will. I assume full responsibility for any loss, damage, or injury sustained from the use of the said items.

3. This release agreement shall bind all my family members and legal heirs.

I acknowledge that I have read and understood the above agreement and am signing it out of my own free will.

Witnesses:

____________________________       __________________________

                                                  Participant

____________________________       __________________________

Tips for Drafting a Hold Harmless Agreement in North Carolina

To ensure a hold harmless agreement NC is valid and effective, consider the following best practices:

  1. Use Clear Language: Avoid legal jargon where possible and define all parties and obligations explicitly.
  2. Avoid Overreaching Provisions: Do not include terms that indemnify a party for its own negligence in construction-related contracts, as this is void under NC law.
  3. Tailor to the Activity: Customize the agreement to the specific risks involved in the project or relationship.
  4. Include Insurance Provisions: Require proof of insurance to add an extra layer of risk protection.
  5. Seek Legal Review: Even when using a template, consult a North Carolina attorney to review the final document.

For those who need help creating or reviewing a hold harmless agreement NC, legal assistance is available through UpCounsel's network of experienced business attorneys.

Frequently Asked Questions

  1. Is a hold harmless agreement legally binding in North Carolina?
    Yes, but only if it complies with state laws, including prohibitions against indemnifying a party for its own negligence in certain contexts like construction.
  2. Can a hold harmless agreement protect me from all liability?
    Not always. North Carolina law limits indemnity against your own negligence in many construction or public service contracts.
  3. What is the difference between a hold harmless and an indemnity agreement?
    While both shift liability, indemnity usually includes reimbursement for losses, whereas hold harmless focuses more on preventing lawsuits or claims.
  4. Do I need an attorney to draft a hold harmless agreement in NC?
    It's strongly recommended, especially to ensure the agreement complies with NC-specific laws and is enforceable.
  5. Can I use a template for my hold harmless agreement?
    Templates are helpful starting points, but they should be customized and reviewed by legal counsel for your specific situation and jurisdiction.

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