Intelligent Advocacy, Simplified.

news

Blawg

Limits on Construction Contract Indemnity Clauses in Louisiana

An indemnity clause is likely to be found in every construction contract. However, in Louisiana, what exactly one party can indemnify another for is limited.

According to Black's Law Dictionary, an "indemnity clause" is "a contractual provision in which one party agrees to answer for any specified or unspecified liability or harm that the other party might incur." There are three main types of indemnity clauses:

  • Broad form indemnity: Indemnitor (the compensating party) assumes an unqualified obligation to hold the indemnitee (party being compensated) harmless from all liability regardless of which party was actually at fault, even if the indemnitee was solely negligent.

  • Intermediate form indemnity: Indemnitor assumes all liabilities of the indemnitee relating to the subject matter of the contract, except for the injury or damages caused by the indemnitee's sole negligence.

  • Limited form indemnity: Indemnitor indemnifies the indemnitee only to the extent of the indemnitor's own fault in contributing to the loss.

Louisiana Revised Statute § 9:2780.1(B), Louisiana's so-called anti-indemnity statute, places certain restrictions on what extent one party may indemnify another. The net result of this statute, similar statutes, and public policy considerations is that Louisiana is a limited form indemnity jurisdiction.

In relevant part, La. Rev. Stat. § 9:2780.1(B) states that any "clause ... affecting a ... construction contract which purports to indemnify ... the indemnitee from and against any liability for loss or damage resulting from the negligence or intentional acts or omissions of the indemnitee, ... or a third party over which the indemnitor has no control is contrary to the public policy and is null, void, and unenforceable."

In other words, Louisiana's anti-indemnity statute prohibits broad and intermediate form indemnity provisions. For example, a subcontractor cannot be required to indemnify the general contractor for the general contractor's negligence or intentional misconduct. Similarly, the statute does not permit indemnification for the negligence or intentional acts of a third party over whom the indemnitor has no control.

Other statutes relating specifically to public contracts contain the same prohibitions. For example, La. Rev. Stat. § 38:2195 states that public entities are prohibited from assuming liability for damages caused by others with whom the public entity contracts. Conversely, La. Rev. Stat. § 38:2216(G) voids any indemnity agreement that requires a contractor to protect the public entity from third party claims caused by the public entity.

In sum, in Louisiana, for an indemnity clause to be deemed enforceable, any obligation by an indemnitor should be solely limited to the loss resulting from the acts or negligence of the indemnitor.

Imtiaz Siddiqui