The Indemnity Agreement Quandary

On Behalf of | Dec 23, 2020 | Construction Litigation

Seasoned subcontractors who work for themselves are continuously looking for work. Competing for contracts from general contractors and developers present challenges. Oftentimes, it hinges on not only their bid but also the reputation they have built over time.

Even with a solid track record, one project can change things. Subcontractors are well aware that despite all the attention to quality and detail, they could still be found accountable for accidents that occur because of the work they have done. They find themselves in the position of defending themselves.

The complexity of project documents are subject to legal interpretation and often used against, nor them. Indemnity agreements are commonplace, yet seem to “pass the buck” when it comes to standard verbiage that the subcontractor holds the general contractor or developer “harmless” from third-party claims, even in completed projects that have zero defects, oversights or other problems.

Countless legal precedents exist and back up this “devil’s bargain.” A jury can rule that negligence of the subcontractor did not exist. Yet, the obligation for financial damages is on the subcontractor should the plaintiff prevail. How the work was done is not as important as who did the work. IF it was the subcontractor who signed an indemnity agreement, they must pay.

While seemingly illogical, it is a burden a subcontractor must carry. The strongest defense that the subcontractor went to great lengths to ensure that everything was done properly is not the point. The money earned by that professional will likely be used to pay not only legal fees but also monetary damages for the injuries suffered.

Indemnity agreements force subcontractors to look for projects that present significant risks. Options do exist. Retaining an attorney to negotiate better terms with verbiage that includes claims of negligence versus claims arising from work can make a considerable difference.