In the construction industry, an indemnity clause is one of the most negotiated and disputed provisions in a construction contract. In this article we will discuss the importance of indemnity clauses for contractors, and why they are one of the most complicated clauses in a contract.
The Breakdown of an Indemnity Clause
An indemnity clause is defined as a risk transfer provision that’s goal is to transfer risk from one party (the indemnitee) to the other (the indemnitor).
How Does the Indemnity Clause Work?
As Jacksonville construction attorneys, we are aware that if a construction contract includes an indemnity provision, it’s essential that the indemnitor is aware that they are agreeing to compensate the indemnitee for any losses that come from a claim brought on by a third party. For example, we’ve seen a case where a third party fell down a set of stairs and sued the owner of the building (the indemnitee) for their injuries, saying that the owner did not have the stairs built in accordance to the building code. If the owner had included an indemnity clause in their contract with their contractor (the indemnitor), the owner would have the power to make the contractor compensate them for the restitution they paid to the third party.
What to be Aware of with Indemnity Clauses
When a contractor is working with their Jacksonville construction lawyers on drafting and negotiating an indemnity clause, there are a few things they should keep in mind.
Make Certain Your Indemnity Clause is Enforceable
Indemnity clauses only work they way they’re designed to if they are enforceable. Additionally, indemnity clauses are only as effective as they are applicable.
Check the Limits on Indemnity Clauses
We know that Indemnitors that want to limit their indemnity responsibility will try to limit the indemnity clause to the extent caused by their acts. On the other hand, indemnitees that want their indemnity provisions easily understood will ask their indemnitees to compensate them for any losses rising out of the indemnitees work.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.