Reader Patrick Grant, assistant general counsel of S & B Engineers and Constructors, told me about the new “anti-indemnity” law that the Texas legislature recently passed.
Go here for the full text of House Bill 2093, but here’s the part that Patrick was interested in:
Sec.A151.102. AGREEMENT VOID AND UNENFORCEABLE. Except as provided by Section 151.103, a provision in a construction contract, or in an agreement collateral to or affecting a construction contract, is void and unenforceable as against public policy to the extent that it requires an indemnitor to indemnify, hold harmless, or defend a party, including a third party, against a claim caused by the negligence or fault, the breach or violation of a statute, ordinance, governmental regulation, standard, or rule, or the breach of contract of the indemnitee, its agent or employee, or any third party under the control or supervision of the indemnitee, other than the indemnitor or its agent, employee, or subcontractor of any tier.
Sec.A151.103. EXCEPTION FOR EMPLOYEE CLAIM. Section 151.102 does not apply to a provision in a construction contract that requires a person to indemnify, hold harmless, or defend another party to the construction contract or a third party against a claim for the bodily injury or death of an employee of the indemnitor, its agent, or its subcontractor of any tier.
I leave it to others to consider the broader implications of this law. I’ll limit myself to noting that using “magic words” in a statute is just as unhelpful as using them in a contract—maybe more so, as the resulting confusion is inflicted not just on the parties to a given contract.
I’d ask the drafters this: What do you think hold harmless means? I wager they never gave the matter any thought. Even if they did, who cares—the phrase has no generally accepted meaning. (See this January 2007 blog post.)
Furthermore, because the drafters dumped into the statute the hack triplet of indemnify, hold harmless, and defend, some might be tempted to argue that the statute doesn’t cover contracts that accomplish the same end using different verb structures, such as be liable for.
So the construction industry would have been better off if the drafters of House Bill 2093 had expressed the scope of the statute more generally.
> the hack triplet of indemnify, hold harmless, and defend
The phrase in the statute is “indemnify, hold harmless, or defend; it’s not a triplet. The statute is saying that any of the three is against public policy, thus addressing all sorts of drafter idiosyncracies.
In any case, these are two and perhaps three distinct duties:
Indemnify: Pay or reimburse the indemnitee for all liabilities and expenses arising from the claim in question.
Hold harmless: It’s never been completely clear to me what this means; I’ve read that some courts regard it as akin to an advance release, as in “even if you’re at fault, I won’t hold you liable.”
Defend is a separate duty from indemnify. In 2008 the California Supreme Court held that when a contract includes both an indemnity obligation and a defense obligation, and a third party sues the protected party, the indemnifying party has a duty to defend the claim, even if it turns out after trial that the indemnifying party was not at fault and therefore had no indemnity obligation. See Crawford v. Weather Shield Mfg., 44 Cal.4th 541 (2008).
D.C.: I used the word “triplet” to suggest not redundancy but instead the rote incantation of the three elements.
Hold harmless is pernicious nonsense and should be omitted; what a judge has to say on the subject is only of academic interest to me. Yes, defend relates to something else, but it’s reckless to think that that word by itself covers the territory.
Ken
Ohio has a similar law, but Ohio’s does not refer to hold harmless of to defend.
2305.31 Promisee indemnified against damage liability.
A covenant, promise, agreement, or understanding in, or in connection with or collateral to, a contract or agreement relative to the design, planning, construction, alteration, repair, or maintenance of a building, structure, highway, road, appurtenance, and appliance, including moving, demolition, and excavating connected therewith, pursuant to which contract or agreement the promisee, or its independent contractors, agents or employees has hired the promisor to perform work, purporting to indemnify the promisee, its independent contractors, agents, employees, or indemnities against liability for damages arising out of bodily injury to persons or damage to property initiated or proximately caused by or resulting from the negligence of the promisee, its independent contractors, agents, employees, or indemnities is against public policy and is void. Nothing in this section shall prohibit any person from purchasing insurance from an insurance company authorized to do business in the state of Ohio for his own protection or from purchasing a construction bond.Effective Date: 11-19-1975