Proscribes indemnity agreements in motor carrier transportation contracts

2 Co-sponsors

• George Latimer
• Michael H. Ranzenhofer

BILL NUMBER:S4173A

Title of bill

An act to amend the general business law, in relation to proscribing indemnity agreements in motor carrier transportation contracts

Purpose

The General Business Law is amended by adding Section 398-e, this section will prohibit the use of indemnification clauses in contracts between shippers and motor carriers.

Summary of provisions

Section 398-e (1) (a) defines "motor carrier transportation contract."

Section 398-e (1) (b) defines "promisee".

Section 398-e (2) makes any contract that purports to indemnify, defend or hold harmless, or has the effect of indemnifying, defending or holding harmless, the promisee from or against any liability for loss or damage resulting from the negligence or intentional acts or omissions of the promisee; is against the public policy of this state and is void and unenforceable.

Justification

Current law does not prohibit a shipper from including indemnification language in the contract between the shipper and motor carrier. The indemnification absolves the shipper of all liability for damage to goods regardless of fault. For example, if a shipment of produce is damaged in the warehouse because it was kept there too long, it is the responsibility of the trucking company because of the indemnification provision in the contract.

Because indemnification language is commonly included in contracts, motor carriers have no choice but to accept the terms. Forty-two states have passed similar legislation to address this growing problem. Proposals or discussions are under way in the other eight states.

This legislation will not limit anyone's ability to collect for damaged goods but will simply hold the responsible party liable.

Legislative history

S.4843/A.8254 of 2011-12, S.1087/A.3673 of 2013-14

Fiscal implications

None.

Effective date

Immediately.