Defend, Indemnify, and Hold Harmless Terms in Construction Contracts: Key Differences, Distinct Obligations

Description

Parties to a construction contract rely on indemnification provisions to allocate risk and liability for injuries and other losses during a project. Often these provisions contain the phrase "defend, indemnify, and hold harmless" which are often mistakenly believed to be interchangeable terms and, therefore, included as boilerplate language in project agreements. However, each of these terms has nuanced meanings and distinct obligations and may vary based on jurisdiction. Counsel should understand these variations to best protect their clients during the negotiation and drafting process.

For example, the concept of indemnification imposes an obligation on the indemnitor to pay or reimburse the indemnitee for covered losses when an actual loss or liability has occurred. Whereas the duty to defend arises as soon as a claim is filed against an indemnitee and involves a responsibility to reimburse or advance costs related to a third-party claim, and possibly a right for the indemnitor to assume control of the defense.

The concept of hold harmless may also include duties beyond simple indemnification. Although the majority of states consider "hold harmless" and "indemnify" to be synonymous, a minority of states view "hold harmless" as an obligation to pay both actual losses and potential liabilities while "indemnify" protects against actual losses only.

Listen as our expert panel discusses key differences between these terms commonly used to allocate risk in construction contracts and how they may vary based on jurisdiction. The panel will examine the interplay with insurance and how it may affect the terms. The panel will also provide best practices for drafting and pitfalls to avoid.