Restrictions on Indemnification Clauses in Commercial Construction Contracts
Posted by Carr McClellan | Share
Under existing law, provisions in construction contracts which allow one of the parties to use indemnification clauses to pass on to the other party liability for damages for death, injury to property, injury to persons, or other loss, damage or expense (“Damages”) is prohibited if the damages are caused by the sole negligence or willful misconduct of the first party or its agents, servants or independent contractors, or for defects in design furnished by those persons. That leaves open the possibility that the first party can use indemnification clauses to pass on liability for the first party’s active negligence, as long as it is not solely negligent.
Under legislation passed in 2011, with certain exceptions, provisions in construction contracts and amendments entered into on or after January 1, 2013, will be void and unenforceable if they try to use indemnification clauses to pass on to a subcontractor liability for Damages caused by the active negligence or willful misconduct of the general contractor, construction manager, or other subcontractor, or their other agents, other servants or other independent contractors, or for defects in design furnished by those persons, or to the extent the claims do not arise out of the scope of work of the subcontractor pursuant to the construction contract.
This portion of the 2011 legislation does not apply to certain contracts, including contracts for residential construction, public agency contracts, and contracts with the owner of privately owned real property, and some insurance policies or programs. However, some of these excepted contracts are covered in other parts of the legislation.
Category: Corporate and Business
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