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Understanding indemnity in construction contracts

Construction disputes can get complicated, which is one reason why contracts are so important for construction projects. They specify the rights and responsibilities of every party involved in a project. People in Idaho should understand what some of the key components of these contracts are, particularly indemnity clauses.

What indemnity means

Indemnity is basically a contract between two parties. In an indemnity clause, one party is agreeing to make good the losses or damages caused by the other party. Indemnity clauses are often seen in insurance contracts. They’re also fairly common in construction contracts.

Indemnity and construction

Indemnity clauses are included in construction contracts because they mitigate risk. In general, these clauses say that the provider will hold harmless, indemnify and defend the client. There are several kinds of indemnity clauses.

In broad form indemnity, the contractor agrees to be responsible for their negligence and for that of a third party. This means that they can also sometimes be held liable for the actions of the client. In intermediate indemnity, the contractor agrees to be responsible for negligence by any third party except for the client. Contractors strongly prefer this kind of clause.

Other types of indemnity clauses include comparative form, work-related and mutual clauses. Mutual clauses assign the same responsibilities to both parties in the contract. Indemnity clauses are viewed more favorably in some states than others; Idaho is generally accepting of these clauses.

Construction law disputes

Indemnity clauses are particularly important in commercial construction law when there’s been an injury on a construction site. It means that owners can be compensated in the event that they’re sued. It’s a good idea to contact a lawyer if such a situation arises as an experienced attorney may help parties in the contract navigate the situation.