The Owners' Manual - Issue 7

Legal Brief

By the Legal Dept.

Practical advice based on BL’s policies and procedures as well as things that might be helpful in your life outside BL.

Indemnification - that nasty clause in a client-written contract that the Legal Department is always harping on. What does it mean? What are the risks? Simply speaking, indemnification is the agreement to assume a specific liability in the event of a loss. It may mean a shifting of risk from one party to another. When a consultant indemnifies a client, the consultant may be taking on a client’s actual or potential legal liabilities. When a contractor assumes control of an owner’s property and occupies it for the purpose of constructing something on it, it’s reasonable to ask the contractor to hold the owner of the property harmless from liability for anything that happens on the site. The same logic does not apply to architects, engineers, environmental scientists or land surveyors. Consultants do not occupy or exercise constructive control over the jobsite. Instead they are providing professional and rather intangible services for the benefit of a client and it makes no

sense for them to have to provide the same protection as a contractor. Safe to say, I could take up the entire Owners’ Manual with the ins and outs of indemnification language but I doubt any of you would want to read it. Here’s the bottom line and what we are insured for – Consultant agrees, to the fullest extent permitted by law, to indemnify and hold harmless the Client against damages, liabilities and costs arising from the negligent acts, errors or omissions of the Consultant in the performance of the professional services under this Agreement. Note what words you are NOT seeing – “defend”, “claims, suits”, “except for the sole negligence of the client”, etc. etc. As always, the Legal Department must review any client-drafted contract before signing. We welcome any and all questions regarding indemnification and if people are interested, would be happy to do a Lunch with Legal just on contract language.