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Technical Corner

Understanding The Facility Contract Indemnity/Hold Harmless and Insurance Clause

August 29, 2023

Facility rental contracts are legal documents that are often only truly scrutinized when one of the parties feels it has been breached, or an issue occurs. There was a time that these documents were crafted by the facility manager but today, they are usually created by a person with legal and/or risk insurance expertise. The recently released ORFA  Alert - Ice Plant Operational Limitations Warning suggested that the current facility contract should ensure that responsibility for liability for an issue associated with pressing an ice rink past its operational capability is identified and that all parties understand their legal position should something go wrong. The importance of regular review of all facility contracts cannot be overemphasized. Facility operations and management will continually shift based on a variety of influences. Influences that may include internal policy change, regulatory change or legal matters that may have worked their way through the court system.

The ORFA reached out to Jessica Jaremchuk, Vice-President, Risk Management Services at Intact Public Entities (IPE) for advice to help ORFA members better understand the different risk awareness and related tools that can help ensure that the facility is well positioned should there be a contractual related issue.

Jessica shared that a rental contract should have an indemnity/hold harmless clause and an insurance clause. A waiver is a separate document that is specific to the actual activity. A facility manager wouldn’t be able to use the same waiver for each activity, unfortunately. The validity of waivers heavily depends on the specificity of the dangers of the activity and on the method of administration by staff. The waiver must specifically refer to the foreseeable risks, dangers, and hazards in respect to which the participant is waiving their rights. Understanding what risk reduction tool should be used is an important management responsibility. These facility risk reduction tools have been challenged by organized sport in the past as they do not want to carry more risk of liability then they have too. Facility insurance should focus on operational issues such as, but not limited to, ice and building conditions. Facility insurance responsibilities should avoid taking responsibility of an activity under the care and control of a user group. Facility managers must understand the content of their facility use contracts and regularly review the documents to confirm they remain reflective of the current level of operations and service provision.

Jessica further pointed out that it was important for facility managers to understand that a waiver and/or a rental contract may not fully protect the facility from poor or unsafe conditions. If management knowingly rents the facility when its not in a reasonable state of repair (i.e., It’s been pushed past operational capacity), the facility owner may be held responsible, not the renter.

Tools such as the ORFA Recreation Facility Asset Management (RFAM) software is becoming one of the most important internal operational tools a facility manager has available to keep senior administrative staff and elected officials updated on infrastructure condition. This information offers updates in real time. If kept current, facility management will be able to share that the facility is or is not in a reasonable state of repair. The ORFA relationship with IPE further allows members to access a variety of IPE resources that they make available to ORFA members to assist them in better understanding rental contract design, maintenance, and proper execution.

The ORFA’s Legal Awareness II – Managing in a Recreation Environment is recommended training for any member who has supervisory or management responsibilities in our industry.

    Comments and/or Questions may be directed to Terry Piche, CRFP, CIT and Director, Training, Research and Development, Ontario Recreation Facilities Association

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