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S3240Senate2017-2018 SessionSame asA5330

Ban Construction Indemnity Clauses

Official title

“Makes indemnification agreements relating to construction contracts void as against public policy”

Sponsor John A. DeFranciscoSD-50Affects Legal
Status
In Senate Committee
Judiciary
Impact
5/10
Moderate
Passage
0%

Bill progress

Step 2 of 7

In committee · Judiciary

What's happening

This bill amends construction contract laws to prohibit indemnification for damages caused by the promisor or their agents’ negligence or culpable acts.

Why it matters

  1. Limits risk-shifting in construction contracts. The bill stops parties from using contract language to transfer responsibility for damages (like injuries or property loss) to another party if those damages were actually caused by the negligence or wrongful acts of the party seeking indemnity or their agents, employees, subcontractors, or vendors. This means parties can’t escape liability for their own mistakes through contract clauses.

  2. Promotes accountability and safety. By preventing parties from contractually insulating themselves from the consequences of their own negligence or misconduct, the bill encourages all participants in construction projects to prioritize safety and proper practices, potentially reducing accidents and unsafe shortcuts.

  3. Protects smaller contractors and subcontractors. Often, smaller construction firms, subcontractors, or vendors have less bargaining power and are pressured to accept broad indemnity clauses that make them liable for damages even when they are not at fault. This amendment helps protect them from unfair contractual burdens that could threaten their financial viability.

  4. Clarifies insurance and indemnity boundaries. The bill leaves intact the validity of insurance contracts and workers' compensation agreements, ensuring that legitimate risk management tools remain available, but draws a clear line against using indemnity clauses to cover a party’s own culpable conduct. This distinction can help prevent confusion and litigation over who is ultimately responsible for damages.

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Who cares

Headline styles

Ban Construction Indemnity Clauses

Plain English, a few words. Used as the page title.

Sponsors

Primary sponsor
John A. DeFrancisco

Senator · Senate District 50

No co-sponsors yet.

History

  1. Referred to judiciary
  2. Referred to judiciary

Companion bill

The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.

A5330Assembly

Ban Unfair Construction Indemnity

In Assembly Committee · Judiciary · Sponsor Michael Cusick

Impact 5 · Moderate0% to pass

Full text

1 pageUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗

STATE OF NEW YORK

3240

2017-2018 Regular Sessions

IN SENATE

January 20, 2017

Introduced by Sen. DeFRANCISCO -- read twice and ordered printed, and when printed to be committed to the Committee on Judiciary

AN ACT to amend the general obligations law, in relation to indemnification agreements relating to construction projects

The People of the State of New York, represented in Senate and Assembly, do enact as follows:

Section 1. Subdivision 1 of section 5-322.1 of the general obligations law, as amended by chapter 67 of the laws of 1993, is amended to read as follows:

1. A covenant, promise, agreement or understanding in, or in connection with or collateral to a contract or agreement relative to the construction, alteration, repair or maintenance of a building, structure, appurtenances and appliances including moving, demolition and excavating connected therewith, purporting to indemnify or hold harmless the promisee against liability for damage arising out of bodily injury to persons or damage to property not contributed to, caused by or resulting from the negligence or other culpable act of the [promisee, his] promisor, its agents [or], employees, subcontractors or [indemnitee, whether such negligence be in whole or in part,] vendors is against public policy and is void and unenforceable; provided that this section shall not affect the validity of any insurance contract, workers' compensation agreement or other agreement issued by an admitted insurer. [This subdivision shall not preclude a promisee requiring indemnification for damages arising out of bodily injury to persons or damage to property caused by or resulting from the negligence of a party other than the promisee, whether or not the promisor is partially negligent.]

§ 2. This act shall take effect on the thirtieth day after it shall have become a law.

EXPLANATION--Matter in italics (underscored) is new; matter in brackets

[ ] is old law to be omitted.

LBD00256-01-7

Reflowed for reading: line numbers and page breaks removed. Cite the official text.

Sponsor's memo

Title of bill

An act to amend the general obligations law, in relation to indemnification agreements relating to construction projects

Purpose

To forbid agreements in construction contracts indemnifying a promise for damages caused by third parties.

Summary of provisions

Section 5-322.1 of the General Obligations Law is amended to forbid not only agreements whereby a promisor indemnifies a promise for damages caused by the promisee's negligence, but also to agreements whereby a promisor indemnifies a promise for damages caused by third party negligence.

Justification

Section 5-322.1 of the General Obligations Law, as amended in 1981, prohibits clauses in a construction contract between an owner and a contractor, or between a contractor and a subcontractor, purporting to indemnify the owner or contractor against liability for personal injury or property damage arising from the negligence of such owner or contractor.

However, under current law, contractors or subcontractors can be required to indemnify an owner or contractor for damages due to injuries caused by the negligence of third parties. Since a subcontractor often has no control over other contractors and subcontractors on the job site, it is grossly unfair to place the burden on a subcontractor by requiring it to indemnify the contractor for negligence of those third parties. The subcontractor should be responsible for its own negligence but not for the negligence of unrelated third parties.

Legislative history

2015-16: S.32/A.4267; 2013-14: S.1215/A.527; 2011-12: S.3183/A.5026 Died in Judiciary; 2009-10: S.801/A.2372 Died in Judiciary; 2007-08: Referred to Judiciary; 2005-06: Referred to Judiciary; 2003-04: Held for consideration in Judiciary; 2000: Referred to Judiciary; reported with amendments; 1999: Referred to Judiciary; 1998: Referred to Judiciary.

Fiscal implications

None.

Effective date

This act shall take effect thirty days after it shall become law.

Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.