Understanding Your Construction Contract The Indemnity Clause - construction attorney - Alves RadCliffe

Understanding Your Construction Contract: The Indemnity Clause

Imagine this scenario: You’ve hired a general contractor to patch up your roof that has been stripped by extreme weather. While on the job, a subcontractor injures themself and sues you, the property owner. Fortunately, your contract with the general contractor has an indemnity clause that requires the general contractor to pay the subcontractor.

The above is a simplified example of how the indemnity clause can protect you when accidents happen. Often, a construction attorney or general consultant with experience in construction law  is needed to lay out the intricacies of the clause and figure out exactly who holds responsibility for injuries and damage.

What is an indemnity clause?

An indemnity clause determines who assumes responsibility for risk. There are three main parties in a clause: the claimant (the party making the claim), the indemnitee (the party being accused), and the indemnitor (the party taking responsibility for the accused). 

In the sample scenario above, the property owner is the indemnitee, the subcontractor the claimant, and the subcontractor the indemnitor. The clause transferred responsibility to the general contractor, protecting the property manager from legal expenses. Because indemnity clauses deal with the transfer of legal risk, they’re a common type of construction dispute.

What are the different types of indemnity clauses?

There are three main types of indemnity clauses. The broad form of indemnity states that the indemnitor assumes all responsibility for the indemnitee. In practice, this could be a general contractor taking responsibility for damages/injuries caused by subcontractors. In this case, if the subcontractors are explicitly negligent, their risk is passed onto the general contractor.

The immediate form of indemnity is a more restricted version of the broad form, but still relatively broad. The indemnitor assumes all responsibility unless the indemnitee is completely responsible. This means if the indemnitee is partially responsible, the indemnitor still assumes responsibility. In other words, immediate indemnity is “all or nothing.”

The third and most common indemnity clause is the comparative form, which follows common law principles by allocating responsibility to the party associated with the negligent act. The associated party has to be fully responsible for the negligent act, which can stir dispute among parties.

How can you deal with an indemnity clause?

As a property owner working with contractors, get familiar with your contract’s indemnity clause. Keep an eye on your project and look out for unforeseen circumstances. If an indemnity clause is invoked, negotiation or taking legal action on your own could turn a complicated situation into an even more complex tangle of accusations. Seek legal assistance from an experienced construction attorney who specializes in litigation.

Alves Radcliffe, LLP — Construction Attorney

If you need assistance with a construction law dispute regarding identity clauses, call Alves Radcliffe, LLP at 916-333-3375 or send us an email. We have over 25 years of combined experience, and serve clients throughout Greater Sacramento, Northern California, and the San Francisco Bay Area.

Comments are closed.