Express Indemnity Clauses in Texas and throughout the United States: Held Harmless, or Held up? 1 Construction Law Journal 2003

1 Const. L. J. 5 (2003)
Express Indemnity Clauses in Texas and throughout the United States: Held Harmless, or Held up?

handle is hein.journals/constlj1 and id is 67 raw text is:
E T I 0 N L A W

I. INTRODUCTION
Most construction con-
tracts are complex docu-
ments that govern complex
relationships for the con-
struction of complex proj-
ects. While law school pro-
fessors may opine that such
contracts are no different
from others in that they

consideration, etc., con-
struction practitioners
know that there are particu-
lar terms in construction
contracts that are heavily
negotiated. Aside from
price, quantity and time, one
of the terms that is the sub-
ject of intense negotiation is the indemnity clause.
Unfortunately, in addition to being the subject of the
most negotiation, it is often the subject of the least under-
standing.
These clauses are intended to transfer significant risks,
usually downstream from the owner to the general con-
tractor, or the general contractor to the subcontractor
and on down the project chain. At the same time, the
insurability of the transferred liability is the subject of
specific terms and requirements in the parties' insurance
policies. Finally, because of a perceived sense of over-
reaching (real or imagined), express indemnity clauses
are the subject of considerable statutory regulation as
well as court scrutiny.
The treatment of these clauses under Texas law is both
typical and atypical. It is typical in that Texas courts have
wrestled with the tension between the parties' freedom
to contract and the need to prevent overreaching and
unfairness where one party has less bargaining power
and may be required to unfairly indemnify another party
for that party's own negligence. At the same time, Texas
law is atypical from many other jurisdictions in that it is
perceived to apply a stricter test, the express negligence
rule, to the enforceability of express indemnity clauses.
Nevertheless, it is also atypical in that, at least in the com-
mercial construction contract context, parties are free to

Y~ PAT WIELINSKI, KYLE GOOCH & CONOR BATEMIAN

PRESS INDEMNITY

LAUSES IN TEXAS

ROUGHOUT THE UNITED

ATES: HELD HARMLESS,

OR HELD UP?

assume the negligence of another party as long as the
express negligence test is satisfied. In other parts of the
country, statutes may prevent such a transfer of liability,
although the common law standards of interpretation of
such claims may be somewhat more relaxed than the
express negligence rule.
This article will provide a description of the treatment
of express indemnity clauses under Texas law and the
laws of other states, including both the common law as to
their enforceability, as well as the effect of anti-indemni-
ty statutes. It will also highlight some nagging issues that
the construction lawyer faces in drafting and negotiating
these types of clauses.1
A. A NOTE ON NOMENCLATURE
As used in this article, the terms hold harmless agree-
ment and indemnification clause are essentially
equivalent and are used interchangeably throughout the
discussion. Under an indemnity agreement or clause, one
party (the indemnitor) agrees to indemnify the other
party (the indemnitee) from the liabilities associated
with the construction endeavor.The indemnitee is usual-
ly the higher tier on the construction project.
In analyzing the enforceability of indemnity clauses, it
is helpful to classify them according to the scope of
indemnity to be provided under them. In other words,
whether the indemnitor is obligated by the indemnitee

* Pat Wielinski practices insurance coverage and risk management law and is a principal in the Arlington office of Cokinos,
Bosien &Young, P.C. Kyle Gooch practices construction law and is a partner with the Dallas firm of Canterbury, Stuber, Elder,
Gooch & Surrat, P.C. Conor Bateman, an associate at Canterbury, Stuber, contributed to this article.The authors would like to
express their gratitude to Mark Correro, Robert Riddle, Scott McBride, Chris Tortorice, and Brian Gaudet, students at South
Texas College of Law, for their assistance in preparing this article for publication.

'Portions of the discussion in this article are adapted from PATRICK J.WIELINSKI,W.JEFFREYWOODWARD,AND JACK P. GIBSON, CONTRACTUAL RISKTRANS-
FER: STRATEGIES FOR CONTRACT INDEMNITYAND INSURANCE PROVISIONS, International Risk Management Institute, Inc. (2003).

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