Explain the term "hold harmless" in contracts.

The term "hold harmless" in contracts refers to a clause that releases one party from liability for certain claims. This means that if a party is held responsible for damages or injuries that arise during the performance of a contract, the other party agrees not to hold them liable for those specific claims. This provision is often used to protect one party from the risks associated with potential legal claims.

By incorporating a hold harmless clause, the parties clarify that one party agrees to bear the consequences of certain claims, leaving the other party shielded from associated legal liabilities. This is particularly useful in situations where one party may be exposed to risks inherent in the work or services being performed.

The other options do not accurately define the term. While sharing liability, mediating disputes, or establishing trust can be important aspects of contracts, they do not pertain to the specific legal function of a "hold harmless" clause, which focuses directly on liability release.