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I recently applied to a position to teach yoga, as an independent contractor. I have formed an LLC, and now the gym would like me to sign a hold harmless agreement. I want to make sure the LLC is signing the agreement, and not myself so that any potential claims would have to be brought through the LLC. Is it enough to sign the hold harmless as "manager of [LLC name]"? I also filled out the W-9 with the LLC name in addition to my own.

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SHORT ANSWER

The hold harmless agreement binds you individually if you sign it individually. But, you may have liability to the firm you are contracting with as a matter of law anyway, as an individual, unless that is expressly waived by contract with the person who might otherwise sue you.

You should get liability insurance for yourself and your LLC. If the place you are working with doesn't have a waiver in place with students already, you should have your students sign one that is drafted by a lawyer in your particular state.

I don't address this is the long answer, but you also shouldn't have signed a W-9 for yourself individually. Only the LLC should have had to fill out the W-9, although this probably doesn't do any great harm.

LONG ANSWER

Two Main Kinds Of Liability: Contract and Tort

There are two main kinds of liability (there are other kinds of liability too, but they come up much less often).

One is for entering into a contract with someone and failing to perform that contract causing the other person not to receive the benefit of the bargain, which is called contractual liability.

The other kind of liability is called tort liability. Tort liability arises when you have a non-contractual legal duty towards someone (i.e. a duty that arises as a matter of law), you breach that duty, and that duty causes someone to suffer damages. If you also have a contract with that person tort liability can be limited, but not eliminated.

The most common form of tort liability by far is liability for "negligence" in which the duty that arise as a matter of law is the duty to use reasonable care under the circumstances to refrain from causing harm to another person.

Limiting Contractual Liability

It is possible to limit contractual liability by saying so in the express language of the contract. Only parties to a contract have liability under a contract. It is also possible to have broader or narrower scopes of an indemnification clause, or to limit another person's right of subrogation against you (i.e. the right to sue you to pay part of what they had to pay when they are held liable for a wrong you committed).

A disclosed agent of a principal (or employee of an employer) including a manager of an LLC, is not contractually liable for breaching the principal's (or employer's) contract. An undisclosed agent or principal (i.e. someone acting on behalf of another but acting as if he or she is acting on his own behalf) is liable on the contract along with the principal or employer.

The principal is liable on contracts entered into by a disclosed purported agent with mere "apparent authority" to do so, even if the agent is not actually authorized to enter into the contract, and the principal in that case has recourse only against the agent.

So, if you sign a contract in your capacity as a manager of the LLC, rather than in your person capacity, and you do not personally guaranty the contract, you do not have contractual liability on the contract. Typically, to do so, you would sign the contract like this (the italic portion would be signed and underlined; the rest would be printed):

XYZ, LLC

By Leonara the Great

Leonara the Great, as Manager

Tort Liability

Vicarious Tort Liability Of An Entity

A principal or employer, including an entity, has "vicarious" liability for the acts of all of the principal or employer's agents and employees within the scope of their agency or employment, even if the principal or employer prohibited those people from doing that as a matter of policy, contract or a specific instruction not to do so.

So, the LLC is liable for anything you do related to the LLC's yoga business.

Liability Of Disclosed Agents, Employees, Managers And Officers Of Entities

As explained below in a case that is representative of the overwhelming majority rule in the U.S., a human being is responsible to third parties for torts in which he participates in the absence of a waiver for that person, even if acting an an agent or employee or contractor of another company:

enter image description here

(I have no idea why I can't get this to appear as text rather than as an image).

Limiting Tort Liability

Tort liability cannot be limited in the absence of a contract with the person actually harmed, or via a statute that limits tort liability.

It is possible to contractually waive tort liability to a person signing a waiver, in advance of a tort occurring, not predicated on contract that arises from negligence or as a matter of strict liability, but not in cases of intentional conduct, reckless conduct, willful and wanton conduct, conduct amounting to bad faith, and conduct that amounts to "gross negligence". Gross negligence is a failure to act using reasonable care that is so extreme and obvious that is comes close to being reckless in character.

Practical Options

Almost every business that engaged in activities that could give rise to personal injuries buys liability insurance that covers lawsuits against the business and the employees and agents of the business (i.e. in this case, your LLC and you personally acting on behalf of the LLC) to address this risk.

This provides two benefits to you and your company: (1) it provides a lawyer, free of charge, to defend you if you are sued for a covered risk, and (2) it pays awards against you in a lawsuit or via a settlement related to a covered risk, up to a stated dollar amount.

Insurance is a near necessity, because not all risks can be waived and even if you have a waiver that is upheld by a court, that doesn't prevent you from having to hire a lawyer to defend yourself in that lawsuit.

Just to provide a reality check that this really is what people do, my wife was an independent contractor pilates instructor for a while and while she did that she paid for liability insurance in addition to having waivers signed by her students. (Bigger studios will have waivers for students already in place that cover you.)

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    Given the nature of the person’s business a public an products liability insurance may not respond if an injury was caused by advice given rather than direct action i.e. if someone hurts themselves because of how you negligently told them to do a yoga move. The OP would need professional indemnity insurance for this. – Dale M Oct 2 at 21:53
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In general, a contract will state who the parties to the contract are, often near the top of the contract. If the contract says that the parties are "John Jones" (the instructor) and "Great Bend Yoga Studio" Jones may be bound personally, even if Jones signs as manager of "Jones Courses, LLC". It is better practice for the contract to be written so that it is between the LLC and the studio:

This contract is between Jones Courses, LLC and Great Bend Yoga Studio. Jones Courses agrees to hold Great Bend Yoga Studio harmless in the event of ...

Any other mentions of Jones as a party within the contract should be changed to instead mention the LLC.

Aside from that detail, the very comprehensive answer by user ohwilleke looks good to me.

  • Excellent point. – ohwilleke Oct 2 at 21:04

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