what indemnify and hold harmless actually means.
To indemnify someone is to promise to cover their losses. Hold harmless is the same promise from the other end: they are not left carrying the cost.
The words that decide how much it costs are not those 2. They are the list of things that trigger it, and whether the promise runs one way or both ways.
this page says what the words mean. it does not say what to do about them, and it is not legal advice.
where it turns up
contractor and services agreements, software order forms, leases, and almost every set of terms attached to a purchase order.
the clause, as it usually reads
wording of the kind these documents carry. it is written for this page, not copied from anyone's contract.
8. Indemnification
Contractor shall indemnify, defend, and hold harmless Client and its officers,
directors, employees, and agents from and against any and all claims, damages,
losses, liabilities, costs, and expenses, including reasonable attorneys' fees,
arising out of or relating to Contractor's performance of the Services,
Contractor's breach of this Agreement, or the negligence or willful misconduct
of Contractor or its personnel.
line by line
indemnify
A promise to pay for someone else's loss. Money moves from the party giving the promise to the party holding it, when 1 of the listed things happens.
In the clause above only 1 side gives it. The contractor covers the client. Nothing in it covers the contractor.
defend
A separate promise, and usually the expensive one. It starts when a claim is made, not when it is decided.
It means paying for the lawyers and running the defence, including for a claim that turns out to be wrong. A clause with indemnify but no defend leaves the other side to fund its own lawyers. They ask for the money afterwards.
hold harmless
In most contracts it is read as saying the same thing as indemnify, from the opposite direction: you will not end up out of pocket.
US courts have not read the phrase identically everywhere. It is sometimes argued to be wider: a promise not to bring the claim in the first place. Where the 2 phrases sit side by side, as they do above, the practical reading is 1 promise stated twice.
arising out of or relating to
This is the trigger, and it is the widest part of the clause. Arising out of points at things the work caused. Relating to reaches anything connected to it.
The list that follows it sets the scope. Above, it covers the contractor's performance, any breach of the agreement, and negligence or willful misconduct. So an ordinary mistake is inside the promise, not only a deliberate one.
any and all claims ... including reasonable attorneys' fees
Claims, not judgments. The promise is triggered by someone making a claim, whatever a court later decides.
Attorneys' fees are called out because the ordinary US rule is that each side pays its own. Naming them moves that cost across.
the officers, directors, employees, and agents
The promise is not only to the company signing. It extends to the named group of people behind it, so a claim brought against an individual there is covered too.
the wording that changes it
the same clause does very different things depending on which of these it carries.
- shall indemnify and hold harmless
- no duty to defend — the other side funds its own lawyers and claims the money back later.
- arising out of
- narrower than arising out of or relating to. It asks what the work caused, not what it touched.
- to the extent caused by the negligence of Contractor
- caps the promise at the party's own fault, and splits the cost where both sides contributed.
- Each party shall indemnify the other
- mutual. The same promise runs both ways, which is the usual shape between 2 companies of similar size.
- subject to Section 9 (Limitation of Liability)
- the money cap elsewhere in the document applies to this promise. Without those words, indemnification is often carved out of the cap and is unlimited.
- third-party claims
- limits it to claims brought by outsiders, so the 2 signing parties cannot use the clause against each other directly.
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documents this clause sits in
whole examples, with the summary sign writes for each one.
what a contractor agreement actually says · what a statement of work actually says · what a software order form actually says
the other 8
does an NDA expire if it has no end date · what joint and several liability means in a lease · can you cross out a clause before signing · how long you have to cancel after signing · what a personal guarantee means on a lease · what a binding arbitration clause means · what entire agreement means in a contract · what an automatic renewal clause means, and how to cancel