AL
Alabama Senate Bill SB24

Alabama 2023 Regular Session

Alabama Senate Bill SB24 Compare Versions

Only one version of the bill is available at this time.
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11 SB24INTRODUCED
22 Page 0
33 IVHP66-1
44 By Senator Albritton
55 RFD: Judiciary
66 First Read: 07-Mar-23
77 PFD: 23-Feb-23
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1212 5 IVHP66-1 01/03/2023 CMH (L) CMH 2023-477
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1414 SYNOPSIS:
1515 Under existing law, indemnification agreements
1616 in contracts for the professional services of a design
1717 professional or for the construction of a road or
1818 bridge are prohibited from requiring a party to the
1919 contract to indemnify, hold harmless, or defend another
2020 party to the contract for any damages arising from the
2121 negligent conduct of the party to be indemnified.
2222 This bill would regulate indemnification
2323 agreements between parties to a construction contract
2424 to prohibit a party to a construction contract from
2525 being required to indemnify, hold harmless, or defend
2626 another party to the construction contract for
2727 liability caused by the sole negligence, or by the
2828 wantonness, recklessness, or intentional misconduct, of
2929 the party to be indemnified.
3030 This bill would also prohibit indemnification
3131 agreements in a construction contract from requiring a
3232 party to the contract to indemnify, hold harmless, or
3333 defend another party to the contract for that party's
3434 own negligence unless the certain requirements are met,
3535 including an agreement on the extent of the monetary
3636 limitation of the indemnification. The bill would limit
3737 the indemnitor's indemnification obligation to the
3838 agreed upon monetary limitation and would require the
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6868 indemnitor to obtain insurance for that amount.
6969 A BILL
7070 TO BE ENTITLED
7171 AN ACT
7272 Relating to construction contracts; to provide
7373 regulations for indemnification agreements in certain
7474 construction contracts.
7575 BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
7676 Section 1. As used in this act, the following terms
7777 have the following meanings:
7878 (1) CONSTRUCTION CONTRACT. A contract, subcontract,
7979 sub-subcontract, purchase order, or other agreement for or in
8080 connection with the planning, management, construction,
8181 alteration, supply, repair, reconstruction, replacement,
8282 rehabilitation, demolition, or improvement of real property as
8383 part of any private or public construction project in the
8484 State of Alabama.
8585 (2) CONTRACTOR. Any individual, firm, corporation,
8686 partnership, or other legal entity that enters into a
8787 construction contract with an owner to improve real property
8888 or perform construction services for the owner.
8989 (3) INDEMNITEE. The party or parties that the
9090 indemnitor is obligated to indemnify, hold harmless, or
9191 defend.
9292 (4) INDEMNITOR. The party or parties obligated to
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122122 indemnify, hold harmless, or defend the indemnitee or another
123123 party.
124124 (5) PARTY. A contractor, subcontractor, or owner
125125 involved in or contributing to the construction of a private
126126 or public construction project pursuant to the terms of a
127127 construction contract. The term does not include a public
128128 awarding authority, as defined under Section 39-2-1, Code of
129129 Alabama 1975.
130130 (6) SUBCONTRACTOR. Any individual, firm, corporation,
131131 partnership, or other legal entity that contracts to furnish
132132 labor or materials to a contractor or other subcontractor
133133 pursuant to a construction contract.
134134 Section 2. (a) A provision, clause, or agreement in a
135135 construction contract shall not require a party to the
136136 construction contract to indemnify, hold harmless, or defend
137137 another party to the construction contract for liability for
138138 damages or losses for bodily injury or property damage, or
139139 losses to a third party, or arising from a third-party claim,
140140 that arise out of, result from, or are caused by the sole
141141 negligence or by the wantonness, recklessness, or intentional
142142 misconduct of the indemnitee or its officers, employees, or
143143 agents.
144144 (b)(1) Subject to the limitations of subsection (a), a
145145 party to a construction contract may agree to indemnify,
146146 defend, or hold harmless another party to the construction
147147 contract for liability for damages or losses for bodily injury
148148 or property damage that arise out of, result from, or are
149149 caused by any negligent act or omission of the indemnitee, or
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179179 its officers or employees or agents, arising from the
180180 construction contract or its performance, only when all of the
181181 following conditions are satisfied:
182182 a. The indemnification agreement is part of the
183183 construction contract.
184184 b. The indemnification agreement contains a monetary
185185 limitation on the extent of the indemnification between the
186186 indemnitor and the indemnitee.
187187 c. The indemnitor agrees to obtain commercially
188188 available insurance to cover the extent of the indemnification
189189 obligations in an amount sufficient to satisfy the monetary
190190 limitation.
191191 (2) A provision, clause, or agreement to indemnify,
192192 hold harmless, or defend another party to the construction
193193 contract, as provided under subdivision (1), shall be
194194 enforceable only to the amount of applicable insurance
195195 required in the construction contract.
196196 (c) A provision, clause, or agreement in violation of
197197 this act shall not cause an entire construction contract to be
198198 invalid or unenforceable. On petition to a court of competent
199199 jurisdiction, any such provision, clause, or agreement in
200200 violation of this act shall be modified by the court to be
201201 consistent with this act. Nothing in this act shall affect the
202202 validity or enforceability of the remaining provisions,
203203 clauses, or agreements in the construction contract.
204204 Section 3. (a) Any provision of law to the contrary
205205 notwithstanding, this act shall not be interpreted or
206206 construed to affect the following:
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236236 (1) The obligation of a party to maintain specific
237237 insurance policies and provide coverage to or include another
238238 party as an additional insured on those policies.
239239 (2) The indemnity obligation of a principal to its
240240 surety on a construction surety bond or to the indemnity
241241 obligation of an insurer to its insured.
242242 (3) The state's doctrine of joint and several
243243 liability.
244244 (4) The state workers' compensation laws.
245245 (5) The provisions of a construction contract for the
246246 professional services of a design professional for which
247247 Section 41-9A-3, Code of Alabama 1975, applies.
248248 (6) The provisions of a road or bridge construction
249249 contract for which Chapter 9 of Title 39, Code of Alabama
250250 1975, applies.
251251 (b) This act shall only apply to indemnity obligations
252252 between parties to a construction contract, as defined in
253253 Section 1, and has no effect on third-party tort claims or
254254 indemnity obligations owed to a public awarding authority, as
255255 defined under Section 39-2-1, Code of Alabama 1975.
256256 Section 4. This act shall be effective for any
257257 construction contract executed or awarded on or after the
258258 effective date of this act.
259259 Section 5. This act shall be effective January 1, 2024,
260260 following its passage and approval by the Governor, or its
261261 otherwise becoming law.
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