Read the Contract! Any and All Contracts!
First a story . . . . . . . .
Our neighborhood applied for a new “Utility” to be installed. We read the contract in its entirety and found the following clause:
“Applicant hereby expressly agrees to indemnify, defend and hold Utility, its directors, officers and employees free and harmless from and against any and all loss, liability, expense, claims, costs, suits, damages, including attorney’s fees, arising out of or related to Utilities use of said property rights and/or the construction/installation, and maintenance of Utility within the easement.”
Phew! Out of all the neighbors, everyone signed the contract, some without reading it, except us.
We were not about to indemnify a huge utility. 5 years later, the utility finally capitulated, and the paragraph was re-written:
“Utility hereby expressly agrees to indemnify, defend and hold harmless from and against any and all loss, liability, expense, claims, costs, suits, damages, including attorney's fees and costs associated with any damage, injuries, and defects due to construction, installation, and maintenance of utilities within the Easement.”
An indemnity clause (hold harmless, liability waiver) is security or protection against a loss in which one party won’t hold the other party liable for damages. Sometimes the clause is buried in a somewhat long contract in hopes it is not found.
In a consumer contract, indemnities paid by a consumer to a business are generally deemed unfair and are prohibited.
Note: Homeowner’s insurance does not cover indemnity clauses.
Always, Always, READ a contract before you sign it.
There should be no pressure to sign a contract. Do not sign a contract if:
- You don’t understand it - have an attorney look at it.
- It does not outline the terms and/or prices discussed/agreed upon.
- There are blanks that aren’t filled in.
- The other party asks you to sign it because they will fill in the blanks later.
- It’s not legible.
- There are unrelated items included
- There is no title and/or page numbers
- There is too much legal jargon.
- There is no end date and/or has a rollover date. A timeline if applicable.
- An indemnity clause that is too broad and one sided.\There is no insurance and compliance terms
- There is no warranty of work if applicable.
- You’re indemnified from subcontractors if applicable.
- There is no dispute resolution and termination clause.
Contracts are meant to be an outline of your business relationship.
In a dispute, this is your document to identify what should happen (or not happen) - like a rental agreement.
Let’s talk about worker’s compensation. Anyone who is doing work on your property and hires subcontractors or have employees, by law, are required to have worker’s compensation. Ask for their Certificate of Insurance - make sure the expiration date is current and call the insurance agency to make sure the insurance has not been cancelled.