Clear-as-Mud Indemnity Clauses
January 10, 2017
Dear YouDig?
Learning Mandarin Chinese would be easier than understanding the indemnity clauses that come at us every day on every job. We try to limit our exposure, but we are often at the mercy of our customer, a bank or the clock. We just want to do a good job. If we make a mistake, insurance should cover us, right? Why can’t there be standardization so all parties can at least know what to expect? We feel exposed to the “Gotcha.” The battle of the forms is a fierce tug of war.
-Pulled in the Mud
Dear Mud,
You are correct to point out the age old classic tug of war of risk allocation. Mud, you already know that risk is in every deal, every contract and every single business and personal encounter! Risk on construction projects is often underestimated in the spirit of trying to get the job moving but becomes a shock when there is an incident and some dude in a suit says, “Gotcha.” So, Mud, STAY CLEAN! First and foremost in all cases, take preventive measures in the field. When negotiating the contract, it is an understatement to say, “try to limit everything you can.” What you can’t limit, try to insure it. Whatever you do, DO NOT IGNORE IT. You and the company might end up taking a bath.
-YouDig?