Reviewed and Validated by: Naman Jain, Associate
Introduction – Mutual Hold Harmless Clauses
A mutual hold harmless provision is when both or all parties (as applicable) to a contract agree to hold each other harmless from the losses or claims arising out of the contract. The concept of ‘hold harmless’ flows from Indemnity. Kindly note that the term, ‘Indemnify’ has been defined in Black’s law dictionary to mean, ‘to save harmless’.
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Scope of Indemnity in Indian Law
A point to be noted here is that the scope of Indemnity in terms of Indian law i.e., Section 124 of the Indian Contract Act, 1872, is limited to acts and conduct of humans. This aspect will need to be borne in mind while drafting the contract in cases where the work is being executed in India and in terms of Indian laws. Section 124 defines a contract of indemnity as a contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person.
Relevance in Contracts
A mutual hold harmless clause is especially valuable in contracts that involve multiple parties — for example, in joint ventures, construction agreements, or service contracts — if each party wants to minimize its potential liability for legal claims by the other. This can help to minimise the chances of prolonged disputes between the parties by allowing them to agree to waive liability to each other for identified risks. But how enforceable such clauses are will depend on their exact wording and willingness to comply with any applicable laws (e.g., statutory limitations on indemnification).
Enforceability in India
Indian contracts do include mutual hold harmless provisions, but such clauses need to be properly drafted to avoid conflict with statutory provisions or public policy. Indemnity clauses have faced scrutiny in Indian courts, especially where the indemnity clause seeks to absolve the indemnifier/indemnitor from liability arising out of negligence and misconduct. Hence, while drafting a mutual hold harmless clause in an Indian contract, one must make sure that the scope, limitation and exceptions are expressly stated, and the clause is not intended to indemnify against liabilities which may be considered illegal or unenforceable under the Indian statutory regime.
