About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

65 Def. Counsel J. 371 (1998)
Transferring Risk by Contractual Indemnity: A View from Oil an Energy

handle is hein.journals/defcon65 and id is 373 raw text is: Transferring Risk by Contractual Indemnity: A View from Oil and Energy Preparing clear, comprehensive and effective contracts of indemnity is a complex task, but it pays off by reducing litigation and expense By Jeanette H. Quay and Lynn M. Luker THE petrochemical and energy resource industries have traditionally subcontracted a large portion of work necessary to locate, capture, transport or refine their products. In almost every contract there is at least one provision designed to either limit or shift potential liability. Courts have adopted a conservative ap- proach to allowing one party to shift its legal liability to another. Before contrac- tual provisions will be enforced, courts have required that the language used be clear and unequivocal, some even requiring very specific or talismanic wording. On the other hand, courts have been far more receptive to allowing one party to obtain insurance coverage from another party's insurers. Perhaps the experience of the oil and energy industries is instructive for other fields in which contractual indemnity is used. In the 1970s and 1980s, Louisiana and Texas both enacted so-called anti-indem- nity statutes, and the Longshore and Har- bor Workers' Compensation act was legis- latively amended twice to address indem- nity claims specifically. Although the Louisiana and Texas statutes have limited the circumstances under which one party may shift its liability to another, with the exception of the Louisiana statute, this leg- islation has not dramatically affected the ability of one party to transfer its liability to another party's insurers. Courts continue to enforce indemnity provisions to the extent allowed by the applicable law. Therefore, the enforce- ment of contractual language continues to Jeannette H. Quay is senior litigation counsel for Global Industrial Technolo- gies, Dallas, Texas, where she manages nationwide litigation. A graduate of Delta State University (B.A. 1976) and Syracuse University Law School (J.D. 1978), she spent several years in private practice be- fore serving as senior litigation counsel for an oil and gas service company prior to her present position. IADC member Lynn M. Luker is a part- ner at Adams & Reese in the firm's New Orleans office. She holds a B.A. from the University of New Orleans and a J.D. and LLM.s (in admiralty and in energy and environment) from Tulane University. She is a professor and director of trial advo- cacy at Tulane. depend on two factors: (1) whether the in- tent to shift those particular liabilities is clearly expressed in the contract, and (2) if the intent is clearly expressed, whether that shifting is allowed by the applicable law. INDEMNITY PROVISIONS A. Contractual Indemnity Defined Absent a contract, under admiralty law, responsibility for any loss is allocated to the parties based on the comparative fault of each party. State laws vary. Some allo- cate fault by heads, and others are based on the comparative fault of the parties. Contractual indemnity, on the other hand, alters this allocation of responsibility by agreement--one party agrees to under- take the legal responsibility of another party. For this reason, indemnity contracts are strictly constructed against the party seeking indemnity. Courts will give effect

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most