Anytime you sign a contract, there is always a legal risk. The same goes when dealing with customers or clients. Wouldn't it be great if you could limit, or stop altogether, the risk of lawsuits? It turns out that, at least to some limited extent, you can do just that.
So-called hold harmless agreements, or exculpatory contracts, are nothing new; all of us have probably signed them at some point in our lives. Usually, they are associated with the risk of injury at an event or from participating in an activity of some kind.
But hold harmless agreements aren't just for limitations on personal injury claims. They also have some use in limiting exposure and liability in business contracts. Our Chicago business litigation lawyer at Ellis Legal explains more below.
Don't Excuse Yourself From Too Much
You cannot just hold yourself completely harmless and blame-free for any breach of a contract. If you aren't bound to the contract at all, and there's no consequence to a breach, the contract can be seen as illusory, and thus, unenforceable.
Limiting Liability
But there are things you can do or add to an existing contract to limit your liability to another party in a business transaction.
One is to limit the extent of contractual damages. So, for example, you could have a cap on the dollar figure that can be claimed for damages. Or, you could limit the type or nature of damages (for example, by excluding consequential damages, or loss of business profit damages, or similar ways that contractual damages are measured).
You can also limit, and hold yourself harmless from, unexpected events that are out of your control. So, for example, you could say that you cannot be sued if a breach is a result of something your supplier or contractor may do or not do. You could limit liability for things like weather, or storms, or law changes.
It is important when using a hold harmless, to say what you are being held harmless from. Is it all activities? Or any action or omission that you caused?
You can also include an alternative dispute resolution clause, which doesn't limit your liability, but could take the case out of the hands of a jury, if that's something you're concerned about.
Injuries and Hold Harmless Agreements
If you have a business where someone could get physically injured, it is even more important to include hold-harmless agreements.
Be certain that the agreement says that people are signing away the right to sue for injuries both inherent and not inherent in the particular activity and that you are exculpating yourself even from your own negligence.
Remember to make any hold harmless and stand out from the rest of the agreement if it is incorporated into a larger agreement. This can be done through bolding, larger type, or putting the hold harmless on a separate contract page.
We can help you draft an enforceable hold harmless agreement. Speak with a Chicago business litigation attorney at Ellis Legal at (312) 967-7629 today.