I am very upset that in construction, indemnity clauses are being used by contractors to throw unnecessary liability on sub-contractors (experiences from work).
The purpose of indemnity, in my opinion, is to protect the owner from any liability that arises from contractors who go on the property and undertake work.
However, I am seeing that client contracts are being used by contractors to have consultants, engineers or other sub-parties indemnify for everything under the sun, including anything that is not within their control or ability to affect (e.g. indemnifying for the structure of a building when your role is to provide a general site review and not a full inspection.)
While this is not sufficient to protect a client against negligence (since it is illegal to contract out of negligence in Qld), it does seem like such a difficult choice for subcontractors and consultants to deal with (e.g. either get work or accept a contract that will not be protected by professional indemnity insurance.)
That being said, I was wondering if you could draft an initial consultant agreement like this. In the original terms, you put in a clause that allows for a limited indemnification that does not trigger the waiver of rights exclusion in an insurance policy. You further add that this clause survives any future agreements (e.g. in case the contractor wants to have a consultant sign a template contract, which I understand is a process to make novation easier - project manager novating to builder for example)
So if the contractor signs your original agreement, and later you sign their consultancy contract without any further review, can you refer to your original agreement when there is a conflict of indemnity?
E.g. The contractor's building falls down and they blame the consultant on the basis that the consultant has accepted full indemnification on their contract. However on your original agreement, you maintain that your indemnity policy is limited and that the contractor signed this with the understanding that the purpose was to keep the claim within an insurable standard.
Sorry, that's a mouth full, but I'm very curious as to know if this would work in Australia and possibly help a lot of people who get strong-armed into accepting unfair agreements.
The purpose of indemnity, in my opinion, is to protect the owner from any liability that arises from contractors who go on the property and undertake work.
However, I am seeing that client contracts are being used by contractors to have consultants, engineers or other sub-parties indemnify for everything under the sun, including anything that is not within their control or ability to affect (e.g. indemnifying for the structure of a building when your role is to provide a general site review and not a full inspection.)
While this is not sufficient to protect a client against negligence (since it is illegal to contract out of negligence in Qld), it does seem like such a difficult choice for subcontractors and consultants to deal with (e.g. either get work or accept a contract that will not be protected by professional indemnity insurance.)
That being said, I was wondering if you could draft an initial consultant agreement like this. In the original terms, you put in a clause that allows for a limited indemnification that does not trigger the waiver of rights exclusion in an insurance policy. You further add that this clause survives any future agreements (e.g. in case the contractor wants to have a consultant sign a template contract, which I understand is a process to make novation easier - project manager novating to builder for example)
So if the contractor signs your original agreement, and later you sign their consultancy contract without any further review, can you refer to your original agreement when there is a conflict of indemnity?
E.g. The contractor's building falls down and they blame the consultant on the basis that the consultant has accepted full indemnification on their contract. However on your original agreement, you maintain that your indemnity policy is limited and that the contractor signed this with the understanding that the purpose was to keep the claim within an insurable standard.
Sorry, that's a mouth full, but I'm very curious as to know if this would work in Australia and possibly help a lot of people who get strong-armed into accepting unfair agreements.
