Link to “Contractor shall indemnify and hold harmless…” “Contractor shall indemnify and hold harmless…”
Does this sound familiar? Nearly every construction contract contains an indemnification provision with some variation of these terms. And if you have ever negotiated a construction contract, you know that indemnification provisions often feature in those discussions. But are the words “indemnify” and “hold harmless” an example of lawyers inserting a meaningless list of synonyms to ensure that all bases are covered? Or do “indemnify” and “hold harmless” mean different things? According to the Alabama Supreme Court in Adams v. Atkinson, No. SC-2024-0528, 2025 WL 1416851 (Ala. May 16, 2025), “indemnify” and “hold harmless” may be synonyms depending on the context.
As noted in one of our prior blog posts, “contractual indemnity is the right of one party (the indemnitee) to claim reimbursement for a loss from another party (the indemnitor).” But does “hold harmless” also give one party a right to indemnification when it appears by itself? This past week, the Alabama Supreme Court held that the answer might be “yes.”
In Adams, a beneficiary of a family trust sued other parties for reimbursement of attorneys’ fees under the terms of a prior settlement agreement. The beneficiary faced a demand for payment of attorneys’ fees from a trustee and sought reimbursement from the defendants under a hold harmless provision. The hold harmless provision did not include the word “indemnify” but required the defendants to “hold [the beneficiary] harmless against any demand… by any corporate trustee… for attorneys’ fees.” The defendants argued that “hold harmless” was a defensive term in that they agreed only to waive any claim against the beneficiary for attorneys’ fees. The beneficiary, however, argued that the hold harmless provision necessarily granted an offensive right to reimbursement, i.e., indemnification, for the attorneys’ fees because it contemplated claims against the beneficiary only.
The Alabama Supreme Court held that “hold harmless” and “indemnify” may be synonyms even when they “appear separately and perform the same function.” To be clear, the court emphasized its holding was “narrow.” In the context of the specific hold harmless provision at issue, holding the beneficiary harmless against demands by corporate trustees only made sense if “hold harmless” meant “indemnify.” The court concluded by (1) confirming that “indemnify” and “hold harmless” are synonyms when they appear as a doublet (i.e., beside each other in the same provision) and (2) reasoning that “hold harmless” can mean “indemnify” when it (a) appears separately and (b) performs the “same function” as an indemnification provision.
In ruling in favor of the beneficiary, the court determined the context of the specific agreement in Adams indicated that the parties intended the hold harmless provision to operate as a reimbursement mechanism rather than a mere waiver of rights. The court found the defendants’ argument illogical as they would have no claim for attorneys’ fees to be waived in an action by a trustee against the beneficiary in which none of the defendants were named.
So, what does Adams mean for your construction contracts?
It means that you should be careful when using the words “hold harmless” by itself because a court or arbitrator may conclude that it means something different than you intended. Regardless of whether you want “hold harmless” language to operate as a waiver or a right to indemnification, later interpretations of that provision may be fact-dependent and may vary depending on the specific language used. If you have any questions about indemnity clauses, whether in contract drafting or in a potential dispute, please contact Chris Selman or Zachary Stewart.