New GA Law Voiding Indemnity in Design Agreements Only Raises Questions
Georgia previously banned indemnity agreements in construction related contracts to the extent they required one party to indemnify another for that party’s sole negligence. On April 26, 2016, Georgia Governor Nathan Deal signed legislation that voids most indemnification and hold harmless agreements in contracts for, or collateral to, engineering, architectural or land surveying services. The new law (effective July 1, 2016), however, still permits indemnification for losses or damages “to the extent caused by or resulting from the negligence, recklessness, or intentionally wrongful conduct of the indemnitor.” An indemnity agreement may only require an engineer, architect, or land surveyor to provide indemnity for their own negligent, reckless, or intentional acts. In other words, the new law follows a comparative fault approach, imposing liability on the design professional only in proportion to their allocation of fault. The new law applies to all contracts entered into on or after July 1, 2016.
Although this law appears to be a “win” for design professionals, it is not without its downsides. First, the law fails to address non-traditional project delivery methods. For instance, the law does not state whether, and to what extent, indemnities are permitted on design/build contracts. If damage occurs that is unrelated to the design process, the new law could invalidate the indemnity provision. Moreover, because the limitation of indemnification is not limited to the design professional, it appears a provision that requires an owner to indemnify the design professional for the acts of the contractor is likewise invalid. Because of the “or collateral to” language contained in the language of the new code section, the law may also invalidate indemnification provisions in the contractor/owner agreement intended to protect the design professional. Accordingly, although the bill is praised by ACEC of Georgia, which introduced the bill, it seems design professionals may actually be less protected from third-party claims than they are under current law.
Photo: Nicolas HendersonThis entry was posted in Architects, Design Professionals, Engineers, Statutes & Legislation and tagged Architects, Engineers, indemnity. Bookmark the permalink.