Don’t Consider Terms of Art Out of Context

Today I received the following email from a reader:

I have been reading your post from July 2012 (Revisiting “Indemnify”).” There seems to be an important distinction between “indemnify” and “hold-harmless” that seems to be getting overlooked (or I missed something in my brief reading).

According to Black’s Law Dictionary “hold-harmless” means “to absolve (another party) from any responsibility for damage or other liability arising from the transaction” and “absolve” means “to release from an obligation, debt, or responsibility.”

Thus, if Acme agrees to “indemnify and hold-harmless” Widgetco, Acme is obligated to reimburse Widgetco for losses or liabilities incurred by Widgetco … AND Acme also absolves/releases Widgetco from any responsibility or obligation for any loss or liability incurred by Acme.

If I agree to indemnify and hold harmless another party, I am obligated to reimburse the other party for its losses/liabilities … AND I waive/release claims against the other party for my own losses/liabilities.

The term “hold-harmless” seems to add significant meaning and purpose.

I don’t necessarily expect a response… I just thought I would share my interpretation of “hold-harmless”.

Here’s how I answered:

The problem here is that you’re attributing meaning to terms of art devoid of context.

I’m comfortable, as a matter of semantics, discounting your argument regarding “any loss or liability incurred by Acme.” But the issue is bigger than that. You’re attempting to divine the meaning of a term of art from a dictionary. Nothing good can come from ignoring context.

More specifically, the one or more verb structures used in indemnification provisions don’t occur in a vacuum. In a comprehensive indemnification provision, you won’t have to look for coded meanings buried in verb structures—the provision itself will make it explicit what’s covered. (For my indemnification language, see this post.) Instead, the verb simply serves to express that Acme—to use your example—is on the hook.

In that context, it matters less what verb you use. You could even say Acme will be liable to Widgetco for. Indemnify is a term of art—it’s a $10 word doing $1 worth of work—but it has a settled meaning, so I recommend sticking with indemnify. By contrast, hold harmless doesn’t have a settled meaning, so it’s a poor choice, even if the context doesn’t allow for confusion.

The only people who are justified in considering terms of art out of context are litigators forced to interpret poorly drafted indemnification provisions. They have no choice.

Mind you, I’m not suggesting that all terms of art can be bled of undue significance in this manner. Some terms of art will always convey a specialized meaning. For more on that, see this 2013 post. Distinguishing between the two kinds of terms of art requires experience, subject-matter expertise, and some semantic acuity.

Related to this topic is the issue of judges relying unduly on dictionary definitions. For more on that, see this 2012 post and this 2011 post.

By the way, if you email me a question and it’s halfway interesting, I’ll likely give you this kind of response. In any event, I’ll reply. Heck, if you call me, I’m the guy who answers the phone. I don’t have people :-)

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.

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