You can find yourself liable for property damage caused by others, OSHA fines caused by others environmental fines or damage. You are on the hook for everyone. All my construction clients are proud folks who will stand behind their work. A clause like this makes you assume the risk of parties beyond your control. Worse, the “arising out of the work” moves the standard from negligence to perfection. So if anything goes wrong (and in construction something will) and it arises out of or is related to your work you get to indemnify and defend.
Owners and developers often approach these clauses with a take it or leave it attitude. Let’s be honest these clauses are cooked up by bowtie wearing lawyers who want to reduce or eliminate their client’s liability. That’s why you get a lawyer to draft your contracts. But on the other side subcontractors are caught between signing the contract and hoping that insurance will cover anything or fighting the clause and probably losing the job.
Well in the midst of all the hoopla in Austin there is a bill pending that we hope will pass. SB555 makes these clauses void as against public policy.
Sec. 502.002. AGREEMENT VOID AND UNENFORCEABLE. A provision in a construction contract is void and unenforceable as against public policy if it requires an indemnitor to indemnify, hold harmless, or defend another party to the construction contract, or a third party, against a claim to the extent that the claim is caused by the negligence, fault, breach or violation of a statute, ordinance, or governmental regulation or rule, or contractual breach of the indemnitee, its agent or employee, or any third party under the control or supervision of the indemnitee, other than the indemnitor, its agent, employee, or subcontractor of any tier, and the claim arises from:
(1) bodily injury or death, except for the bodily injury or death of an employee of the indemnitor, its agent, or subcontractor of any tier;
(2) damage to property;
(3) any other type of damage; or
(4) a fine, penalty, administrative action, or other action assessed by a governmental entity directly against the indemnitee.
Each party would be liable for its own negligence and could not transfer liability by contract or other means. Good news for my construction clients and I hope it passes. You can follow the bill’s progress here: http://www.capitol.state.tx.us/BillLookup/BillStages.aspx?LegSess=81R&Bill=SB555

[*UPDATE: This bill did not make it out of the House. Call your senators and representatives.*]

Kevin M. Murphy provides a full range of legal services to the construction industry, from assisting with code compliance, contract drafting and review, lien and debt collection, and court appearances.