Any business that involves people engaging in voluntary activities on premise are at risk for liability associated with unexpected injuries and unintended damages. For example, multi-unit residential complexes and yacht clubs are chock full of potential liability for the property owner and manager. Depending on your property, there are many chances for a loss to occur:
- Injury at a pool
- Injury in a fitness room
- Injury on a dock
- Injury in a “party room” or common area
- Tripping/falling indoors or outdoors
- Stumbling on a dirt or wooded path
- Playing catch in a common outdoor area resulting in a damage
Your business may get sued for such accidents but there are ways to minimize these risks such as posting warning signs. Another smart method used to decrease the likelihood of being sued involves hold harmless agreements.
What Is a Hold Harmless Agreement
Hold harmless agreements are typically in writing and involve a first party agreeing not to take legal action (sue) against another party. In exchange for this promise, the second party agrees to permit the first party to engage in a given activity.
These agreements can come in many forms. They can be separate contracts or statements added to other contracts. They are also called different names, such as disclaimers or waivers.
Issues to Consider
There are a number of issues to keep in mind with such agreements including:
- Are they necessary?
- Are they enforceable?
- Are they valid (if not worded properly they may have unintended consequences)?
- Are they fair (this depends on the level and nature of risk involved)?
- Are they part of a business or strictly a non-business transaction?
In some cases, it may make a lot of sense to use a valid hold harmless agreement. In others, one may have to make a decision whether a given activity is worth giving up that important right to hold another party responsible for serious injury or substantial damage to property.
The Flanders Group would be happy to discuss with you the use of Hold Harmless Agreements and others methods of risk management. Feel free to contact us any time at (800) 462-6435.