Legal definition

A safe harbor is a provision of a statute or a regulation that reduces or eliminates a party's liability under the law, on the condition that the party performed its actions in good faith. Legislators include safe-harbor provisions to protect legitimate or excusable violations. An example of safe harbor is performance of a Phase I Environmental Site Assessment by a property purchaser: thus effecting due diligence and a "safe harbor" outcome if future contamination is found caused by a prior owner.

Another example is regarding insider information laws. Broker-dealers are required to have in place Chinese walls (also called information barriers) that prevent the transmission of insider information from one department to another. Each broker-dealer firm is required to have its own barriers and to enforce them on its own. Thus, there is no safe harbor regarding this issue.