Idemnification clause in contract 6

[cedarbluffranch]

So here goes more posting about liability of being a professional engineer...

Can I include an idemnification clause in my contract, and if so, will it protect me against lawsuits from the client and general public.

For example, I do some engineering work for John Swearingen. I put a clause in the contract that says John Swearingen idemnifies me from any lawsuit that may arise from my work. (By idemnification, I mean that John Swearingen agrees to protect me in case of lawsuit). Judy Mertz, unrelated to John Swearingen, suffers an injury and blames my design on the injury.

Would this idemnification clause protect me from Judy's claim?

I appreciate yoru comments.

 

[MotorVib]

Ron

You have put in to words things that I have been see and reading you years from all PE's that I know.

Chris

"In this house, we obey the laws of thermodynamics." Homer Simpson

 

[LobstaEata]

All professional liability insurance in the US insure only the professional (or company) for their own negligent acts and ommissions as proved in a court of competent jurisdiction. This requires a reasonably high bar of proof from a plaintiff and generally protects the professional against slap suits. Most insurers require that this (or similar) language be included in the professional's contracts as a condition of full coverage.

Insurance companies also encourage limitation of liability clauses to the maximum of fees collected to be inserted into contracts, as well. Even though not all courts will choose to enforce the limit liability provisions as a matter of public policy, some will, so insurers want you to contractually preserve the option if it is available.

Hope this is helpful.

 

[msquared48]

Notice that the key word here is LIMITATION of liability, not ELIMINATION of liability, which will never happen.

Mike McCann
MMC Engineering

 

[civilperson]

No matter what hold harmless clause you write: If a third party sues you and you lose, then it is your responsibility to go back to court for the loss collection from the signer of the hold harmless agreement. The "hold harmless" agreement" will not stand if your defense of the claim was prefunctory or limited.

 

[Ron]

civilperson...the primary point of an indemnity clause is to keep them (the ones you agree to indemnify) from getting invited to the party. When you sign such a clause you are agreeing not only to give up your right to sue them, but also agree to protect them from the suits of others. Indemnity clauses must be very narrow in scope (indemnify your direct client only and only for your own negligent acts).

 

[civilperson]

Ron, you are assuming that the engineer is holding the client harmless, I am assuming the client is holding the engineer harmless.

 

[Ron]

civilperson...
If you engage in a contract under your standard terms and conditions, then you would generally ask the client to indemnify you for the acts of others. If you are signing a client generated contract, they will usually ask you to indemnify them for acts of everyone and his brother.

Mutual indemnification is fine as long as the same terms are give both ways and the terms are reasonable.

The worst ones are generally the contracts that GC's give to professionals but call them "subcontractors" and use the same contract that they would give to the plumbing or roofing sub. Those often have indemnification clauses scattered and disguised as other clauses.

The contractual minefield.

 

[LobstaEata]

Ron
You are quite correct about GC contracts being toxic for professionals. For example, contractor indemnification provisions are in the form of providing warrantees or guarantees for the work that they produce. If these same warrantees or guarantees are attempted to be applied to the professional, not only is there no means of quality control for the professional beyond the completion of plans, no PL insurance would ever cover a professional's risk beyond that which they can control.

The other finer point is that some indemnification clauses (client prepared) also try to have the professional provide for defense as well as indemnification of the client. Indemnification might help the client from joining the party, but defense of the client to get to that exclusion, will not be paid for by a professional's insurance company, since all PL insurance policies will only provide for the defense of the insured (the professional) for their own negligence.

The professional can agree to anything they want to with a client, but it does not bind the insurance company to any provisions beyond the professional's own contract with that insurance company.

 

[Ron]

LobstaEata...
You said....

"The professional can agree to anything they want to with a client, but it does not bind the insurance company to any provisions beyond the professional's own contract with that insurance company."

THIS IS EXTREMELY IMPORTANT! I wish all professional engineers would understand this and stop signing stupid contracts. It hurts the entire profession when ignorant professionals sign contracts that others wouldn't sign.

Ron

 

[LobstaEata]

Ron .... Agreed!

I don't do any work (bridge design) for State agencies any longer and one of the several reasons is their insane indemnification provisions.

Not only do State agencies expect the professional to "defend and indemnify" the State from liablity, but they also phrase indemnification provisions to eliminate having to prove negligence on the part of the professional. Some also expect the professional to indemnify unidentified third parties. AND....they actually think it's insurable!

 

[Ron]

LobstaEata...
Florida and some other states have statutory limitations on indemnification for construction, particularly public works like bridges. This helps prevent some to the abuse you described.

 

[LobstaEata]

I concur that time limits on liability for construction are much more prevalent in many states these days, but the same liability protection for professional engineers (at least in my neck of the woods) has been struck down repeatedly as being contrary public policy. Engineers in these states are therefore on the hook in perpetuity.

 

[Ron]

Most states have a "Statute of Repose" that applies to engineers, architects,and contractors. In Florida, the time period is 10 years.

My previous point has to do with statutory limitations on actual indemnification in contracts. Florida has such a provision, limiting the scope and intent of an indemnification clause for certain projects.

 

[garpe]

Your fee should have nothing to do with the terms of your contract, your overhead, etc, etc. It should be based on the value YOU place on your services and fair negotiation between you and your client with a healthy dose of self respect. I can't even drive around the block for a client for $250. $500 minimum.

I have been involved as a consultant on a number of legal cases. Engineers are trained to look at things a black or white, either it works or it doesn't. Attorneys operate in a perpetually gray zone where everything is up for discussion. You can write a contract any way you please but remember anyone can sue anyone for anything. If you expect a third party to cover you, you will more than likely have to sue them to do it. No one is going to willingly protect you unless you force them to.

Greg Robinson

 

[Ron]

Greg...I agree with you on the issue of fees. Engineers historically undervalue their services, which leads client to think "commodity". My fees are set by what I provide to my clients, not by what XYZ Engineering's fees might be.

As for contracts, yes you can get sued for anything and you might have to sue to get things from others; however, the clauses in contracts are important to each of us in that some clauses prevent us from getting invited to the legal party; while other clauses bring in other parties to help us share the burden when things go wrong. Going "silent" on certain contractual provisions can be costly, such as failing to get a limitation on your liability, while others, such as an indemnity clause, do not carry implicit action if left out of a contract.

Legal action and its defense can be costly. Good contracts help to keep you from having to needlessly expend your resources to defend a nebulous lawsuit that ultimately may have little or no real merit, but one that has enough perceived merit or enough confusion/obfuscation to carry it past a summary judgment stage.

 

[alehman]

I usually try to get a mediation clause in addition to limitation of liability. As stated above, your prof. liability insurance rep is the best source of advice on this. They are usually eager to help if asked and at least one has a book on the subject.

Alan
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"It’s always fun to do the impossible." - Walt Disney