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St. Mary's Law Journal

Abstract

Owners, general contractors, and subcontractors enter into agreements to ameliorate risk amongst those exercising control. Some of these include hold-harmless agreements, indemnity agreements, releases, and agreements conferring additional insured status to others. Typically, parties enjoy freedom to contract as they wish. Texas has long recognized, as a matter of public policy, a party’s right to draft contracts however it sees fit. Historically, risk-shifting agreements were enforceable if they passed the fair notice requirements, meaning the express negligence rule and the conspicuousness test. The trend in recent years, however, has been to limit exculpatory clauses. In 2011, the Texas Legislature effectively voided risk-transferring agreements in commercial construction as against public policy under the Texas Anti-Indemnity Act (the Act). The Act, which went into effect on January 1, 2012, is codified in sections 151.001 to 151.151 of the Texas Insurance Code. Officially, the Act was passed to protect insurance companies from liability for claims which they did not agree to underwrite. Many speculate that the true purpose of the Act is to protect the imbalance between subcontractors, who typically bear the brunt of indemnity agreements, and contractors, who have more bargaining power. The Act includes sections that render indemnity agreements and other liability-shifting agreements void and unenforceable. Other sections specify the applicability of the Act, exemptions, exclusions, and—perhaps most troubling—the inability to waive any provision of the Act. This Article attempts to provide an analysis which determines whether the Act applies and whether an indemnity agreement or any other risk-shifting contract will be held void and unenforceable.

Publisher

St. Mary's University School of Law

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