What is the purpose of a Hold Harmless Agreement?

A Hold Harmless Agreement is specifically designed to avoid liability. This type of agreement is a legal contract in which one party agrees to assume the liability of another party, thereby protecting that party from claims or damages resulting from certain activities or actions. The essence of such an agreement lies in its ability to transfer risk; the party that signs the agreement takes on responsibility for any injury, loss, or damage, ensuring that the other party is not held responsible.

This is particularly relevant in various business transactions, construction contracts, leases, and service agreements where one party is exposed to potential risks resulting from the actions or negligence of the other party. The intent is to clearly delineate responsibilities and protect one party from legal repercussions that could arise due to the relationship or shared activities.

In contrast, increasing risks, guaranteeing payment, or ensuring compliance do not encapsulate the primary objective of a Hold Harmless Agreement, which centers on liability and risk management. The agreement's framework is focused on delineating and limiting liability, making "to avoid liability" the correct interpretation of its purpose.