Contractual indemnity in construction for your negligence - what year is it?

• Author: Leiby, Larry R.
• Position: Real Property, Probate and Trust Law - Florida

In a construction project in Florida, if an individual or the individual's agent acts wrongfully by action or inaction that results in property damage or personal injury, a contractor, lower tier contractor, architect, engineer, or material supplier will indemnify that person and hold them harmless for their own wrongful act, omission, or default. Except for the year 2000, clauses containing such indemnifications were and are enforceable in Florida if certain conditions were met, which are described below. This concept of indemnification for one's own wrongful acts is discussed in an article at 68 A.L.R.3d 7 (1976), and raises interesting questions.

Is it fair for one person to be responsible for the wrongful or negligent acts of another person? Is the answer to this question any different if the person agrees to take on that responsibility by a contract? Is it reasonable to believe that most people signing construction contracts understand that they are indemnifying the other side from their own negligence? For those people in construction who sign such contracts and understand what an indemnity clause is, (1) there are three basic schools of thought on whether a contractual undertaking to hold someone harmless from that other person's own wrongful acts is fair.

One school of thought, adopted in several states? is that the concept of holding someone harmless from that person's own wrongful acts is simply wrong, not fair, against public policy, and should not be enforced in any event.

The second school of thought, at the other end of. the spectrum, is that people in the construction business should be able to understand the terms to which they are agreeing. If they don't comprehend their responsibility, they should obtain advice to allow them to understand before agreeing to an indemnity undertaking. Further, the parties to a contract should be free to allocate the risks arising out of a construction project as they see fit and there is nothing wrong with an individual agreeing to be responsible for the property damage or personal injury that another person causes if the indemnitor willingly subscribes his name to such an indemnity clause.

The third school of thought (a middle ground) is that such indemnity clauses are subtle, not easily understood, and, in order to be enforceable, they should include some limitation on, or warning regarding, the duty to hold someone harmless from that person's own wrongful acts. Such indemnity should be distinguished from an indemnity for one person to hold another harmless from actions done by the first party, or others working under him. While that may be addressed by contract, it is also addressed in the common law, known as common law indemnity. The subject of this article regards holding one harmless from property damage or personal injury that such individual causes. There is no common law indemnity for that situation. Indemnity for that only arises when agreed in a contract. Florida law evolved from having no statute addressing such clauses (pre-1972), to requiring monetary limits or specific consideration for such clauses as a condition of enforceability (1972-2000), to subtly making such clauses unenforceable for all construction parties (2000-2001), to making them enforceable for construction parties so long as there is...