Can our Alabama contract make the other side indemnify us for our own negligence?
Between private parties yes, but only on clear and unequivocal language, and the clause is strictly construed, and in three fields an Alabama statute now voids it whatever the drafting. The Supreme Court of Alabama has for many years held that as between private parties, indemnity contracts are enforceable if the contract clearly indicates an intention to indemnify against the consequences of the indemnitee's negligence, and such provision was clearly understood by the indemnitor, and there is not shown to be evidence of a disproportionate bargaining position in favor of the indemnitee. In Industrial Tile, Inc. v. Stewart the Court quoted the general rules stated in 41 Am.Jur.2d, Indemnity §§ 9 and 15 (1968): that a promise of indemnity for an act not illegal, immoral or against public policy is valid and may validly cover the indemnitee's own future acts of negligence provided the indemnity against such negligence is made unequivocally clear in the contract, and that a contract of indemnity purporting or claimed to relieve one from the consequences of his failure to exercise ordinary care must be strictly construed, and that such a contract will not be construed to indemnify the indemnitee against losses resulting from his own negligent acts unless that intention is expressed in clear and unequivocal terms or no other meaning can be ascribed to it, and said Alabama has generally followed those rules when construing contracts between private parties, as distinguished from corporations performing a public service. It then held that if the parties knowingly, evenhandedly, and for valid consideration, intelligently enter into an agreement whereby one party agrees to indemnify the other, including indemnity against the indemnitee's own wrongs, if expressed in clear and unequivocal language, then such agreements will be upheld, modifying Alabama Great Southern Railroad Co. v. Sumter Plywood Corp. to the extent it held otherwise. It did not uphold the clause in front of it: it said only that on that record it could not say as a matter of law that the agreement failed to meet the test, and it reversed and remanded the indemnity cross-claim (No. 78-401) for reconsideration while affirming the companion appeal (No. 78-462). Four Justices concurred and three concurred in part and dissented in part. By statute, a road or bridge contract may not require a party to indemnify, hold harmless or defend another party for liability caused by the negligence, wantonness, recklessness or intentional misconduct of the party to be indemnified, and any such requirement in a contract entered into after April 20, 2021 is void and unenforceable (Ala. Code § 39-9-3); indemnity is permitted only to the extent the loss is caused by the indemnifying party's own fault (§ 39-9-4), and an additional-insured requirement may be no broader than that (§ 39-9-5). A contract for the professional services of a design professional entered into after July 1, 2021 is void and unenforceable so far as it requires the design professional to indemnify or hold harmless beyond its own proportionate fault, to defend a claim not covered by its professional liability policy, to add another party as an additional insured on that policy, or to accept a standard of care different from the one the same section supplies: the professional skill and care ordinarily provided by a competent design professional practising under the same or similar circumstances and licences, as expeditiously as is prudent, which applies in place of any differing contractual standard (§ 41-9A-3(b), (d)). And in a motor carrier transportation contract the parties may not agree to indemnify the shipper against its own criminal acts, intentionally wrongful acts or omissions, wantonness, or loss resulting solely from its negligence, nor to indemnify the motor carrier against its own negligence or intentional acts (§ 37-3-23.1(b)).
The trap
Alabama's anti-indemnity statutes are field-specific and are not titled as construction statutes, which is how they get missed. Title 39, Chapter 9 governs a “road or bridge contract”: defined as a contract or subcontract for the planning, construction, repair, reconstruction, replacement, rehabilitation or improvement of any road or bridge financed in whole or in part by state, county, municipal or federal funds, but not a contract for a utility's facilities or equipment in public road or bridge rights-of-way, so a publicly funded road or bridge job is decided by statute and not by Industrial Tile, and the chapter caps additional-insured coverage at the same scope. Read the defined terms together before relying on it: the prohibitions are written as what one "party" may be required to do for "another party", and the chapter defines a "party" as a private business or individual and says the term does not include the Department of Transportation, a county commission or any other governmental awarding authority. The chapter also does NOT reach indemnity of a surety by a principal on a construction contract bond, or an insurer's obligations to its insureds. Section 41-9A-3 governs a “design professional”, meaning, as used in that section, a person or entity licensed or authorised in Alabama to practise architecture, landscape architecture, surveying, engineering, interior design or geology. Each carries a date, and each carries it differently: § 39-9-3 states the prohibition flatly and then makes the offending requirement void in a contract entered into after April 20, 2021, while § 41-9A-3(b) reaches a provision of a design-professional contract entered into after July 1, 2021. So which law governs turns on when the contract was signed, and the authorities cited here cannot settle that for any particular deal. The companion road-and-bridge sections, the permitted-indemnity section and the additional-insured section, state no date of their own. The motor-carrier section is the one most often mis-stated: it voids indemnity running to the shipper not only for criminal acts, intentionally wrongful acts and wantonness but also for “loss or damage resulting solely from the negligence of the shipper”, and it separately voids indemnity running to the motor carrier for the motor carrier's own negligence or intentional acts; it applies only to contracts entered into after May 3, 2012. Three limits travel with it: only the offending part of a clause is void, and only to the extent of the violation; the section expressly leaves alone a carrier's indemnity of the shipper for loss that did not result from the shipper's negligence, wantonness or intentional wrongs, and a requirement that the carrier insure and name the shipper as an additional insured on a policy that is not workers' compensation; and it does not reach the Uniform Intermodal Interchange and Facilities Access Agreement or another intermodal-equipment interchange agreement. It is also built on its own definitions, under which a motor vehicle means one of 10,000 pounds gross or combination weight or more and both "shipper" and "motor carrier" take in that party's agents, employees, servants and independent contractors on the contract. Outside those fields the language is the whole battle and the standard is expression, not inference. The clause Industrial Tile litigated was not a bare “any and all claims” indemnity: it also covered the owner “whether or not caused by or contributed to” the owner's “active, passive, affirmative, sole or concurrent negligence”. A broad “any and all claims” indemnity with no words reaching the indemnitee's own negligence is the clause that fails. And the test has elements beyond wording that a contract cannot recite away: the agreement must be entered knowingly, evenhandedly, for valid consideration and intelligently, the provision must have been clearly understood by the indemnitor, and there must be no disproportionate bargaining position in favour of the indemnitee.
19 authorities
The words that state the rule
The Court's insistence that such provisions be unambiguous and unequivocal arises from its concern that, generally speaking, one should not be able to contract against the consequences of his own wrong. However, as stated in 41 Am.Jur.2d, Indemnity , § 9 (1968), the general rule seems to be: Broadly speaking, a promise of indemnity for the performance of an act not illegal, immoral, or against public policy is valid. Thus, indemnity against loss on account of a business transaction is proper. And, although there is some earlier authority to the contrary, it is now the prevailing rule that a contract may validly provide for the indemnification of one against, or relieve him from liability for, his own future acts of negligence provided the indemnity against such negligence is made unequivocally clear in the contract. Section 15: A contract of indemnity purporting or claimed to relieve one from the consequences of his failure to exercise ordinary care must be strictly construed. Accordingly, it is frequently stated as the general rule that a contract of indemnity will not be construed to indemnify the indemnitee against losses resulting from his own negligent acts unless such intention is expressed in clear and unequivocal terms, or unless no other meaning can be ascribed to it. Alabama has generally followed these general rules when construing contracts between private parties, as distinguished from corporations performing a public service.
The words that state the rule
However, after carefully reviewing all of the authority in this state, we are compelled to conclude that, if the parties knowingly, evenhandedly, and for valid consideration, intelligently enter into an agreement whereby one party agrees to indemnify the other, including indemnity against the indemnitee's own wrongs, if expressed in clear and unequivocal language, then such agreements will be upheld. To the extent that Alabama Great Southern Railroad Co. v. Sumter Plywood Corp. , supra, holds otherwise, it is hereby modified.
- statuteAla. Code § 37-3-23.1enactment date not established
The words that state the rule
(b) Notwithstanding any provision of law to the contrary, a motor carrier and a shipper, in a motor carrier transportation contract, may not agree to any provision, clause, covenant, or agreement contained in, collateral to, or affecting a motor carrier transportation contract that does any of the following: (1) Purports to indemnify, defend, or hold harmless, or has the effect of indemnifying, defending, or holding harmless, the shipper from or against any liability for loss or damage resulting from the criminal acts of the shipper. (2) Purports to indemnify, defend, or hold harmless, or has the effect of indemnifying, defending, or holding harmless, the shipper from or against any liability for loss or damage resulting from the intentionally wrongful acts or omissions of the shipper. (3) Purports to indemnify, defend, or hold harmless, or has the effect of indemnifying, defending, or holding harmless, the shipper from or against any liability for loss or damage resulting from the wantonness of the shipper. (4) Purports to indemnify, defend, or hold harmless, or has the effect of indemnifying, defending, or holding harmless, the shipper from or against any liability for loss or damage resulting solely from the negligence of the shipper. (5) Purports to indemnify, defend, or hold harmless, or has the effect of indemnifying, defending, or holding harmless, the shipper from or against any liability for claims of loss or damage resulting where: a. the property in the trailer is loaded and sealed by the shipper and the motor carrier is not able to inspect the trailer, and b. the manner in which the trailer is loaded and sealed is the proximate cause of the loss or damage. (6) Purports to indemnify, defend, or hold harmless, or has the effect of indemnifying, defending, or holding harmless, the motor carrier from or against any liabilities for loss or damage resulting from the negligence or intentional acts or omissions of the motor carrier. (7) Purports to indemnify, defend, or hold harmless, or has the effect of indemnifying, defending, or holding harmless, the shipper where: a. the property being transported or the packaging of the property being transported has a latent defect that the motor carrier is not able to discover, and b. the latent defect is the proximate cause of the loss or damage.
The words that state the rule
The Court has, for many years, held that as between private parties, indemnity contracts are enforceable if the contract clearly indicates an intention to indemnify against the consequences of the indemnitee's negligence, and such provision was clearly understood by the indemnitor, and there is not shown to be evidence of a disproportionate bargaining position in favor of the indemnitee.
The words that state the rule
The Contractor [Industrial Tile] shall be solely responsible to indemnify and hold harmless the Owner [Courtaulds], its agents, servants and employees, from and against any and all claims, losses, suits, damages, judgments, expenses, costs and charges of every kind and nature, whether direct or indirect, on account of or by reason of, bodily injuries (including death) to any person or persons, including, but not limited to its agents, servants and employees or other of the Owner, Contractor or any subcontractor and injury to or destruction of property (including the loss of use thereof) of the Owner, or others arising out of or occurring in connection with the performance of the work to be done pursuant to the contract and whether or not caused by or contributed to, or alleged to have been caused by or contributed to, by the active, passive, affirmative, sole or concurrent negligence or breach of any statutory duty, whether non-delegable or otherwise on the part of the owner or its agents, servants or employees, or liability therefor imputed as a matter of law to the owner and/or its agents, servants or employees or from the failure of or any condition in materials or parts or faulty workmanship furnished by the Owner, Contractor or any Sub-Contractor and/or their respective agents, servants or employees pursuant to the Contract.
The words that state the rule
Based upon the record before us, we cannot say as a matter of law that the agreement involved in this case fails to meet that test. Therefore, we reverse the trial court, and remand the claim asserted by Courtaulds in its cross-claims against Industrial Tile, based upon the written indemnity provision, for reconsideration in light of this opinion. CASE NO. 78-462 AFFIRMED. CASE NO. 78-401 REVERSED AND REMANDED. TORBERT, C.J., and MADDOX, ALMON and BEATTY, JJ., concur. FAULKNER, JONES and EMBRY, JJ., concur in part and dissent in part.
- statuteAla. Code § 37-3-23.1enactment date not established
The words that state the rule
(e) This section shall apply only to motor carrier transportation contracts entered into after May 3, 2012.
- statuteAla. Code § 37-3-23.1enactment date not established
The words that state the rule
(a) In this section, the following words shall have the following meanings: (1) MOTOR CARRIER. The same meaning ascribed in subdivision (10) of Section 37-3-2, or any successor provision and includes an agent, employee, servant, or independent contractor of the motor carrier if the agent, employee, servant, or independent contractor provides services in connection with the particular motor vehicle transportation contract to which subsection (b) applies.
- statuteAla. Code § 37-3-23.1enactment date not established
The words that state the rule
(c) If any part of a provision of a motor carrier transportation contract violates this section then that part only is void and unenforceable to the extent of the violation. Nothing in this section affects any provision, clause, covenant, or agreement contained in, collateral to, or affecting a motor carrier transportation contract whereby either: (1) a motor carrier indemnifies, defends, or holds harmless a shipper against liability for loss or damage to the extent the loss or damage did not result from the negligence, wantonness, intentionally wrongful acts or omissions of the shipper, or (2) a motor carrier is required to maintain policies of liability insurance and to include a shipper as an additional insured on those policies, provided that the policies are not workers’ compensation policies.
- statuteAla. Code § 37-3-23.1enactment date not established
The words that state the rule
(d) This section does not apply to the Uniform Intermodal Interchange and Facilities Access Agreement administered by the Intermodal Association of North America or any other agreement providing for the interchange, use, or possession of intermodal chassis, containers, or other intermodal equipment.
- statuteAla. Code § 39-9-3enactment date not established
The words that state the rule
A road or bridge contract may not require a party to the contract to indemnify, hold harmless, or defend another party for liability, damages, losses, or costs caused by the negligence, wantonness, recklessness, or intentional misconduct of the party to be indemnified or its officers, employees, or agents. Any such requirement contained in a contract entered into after April 20, 2021 is void and unenforceable.
- statuteAla. Code § 39-9-4enactment date not established
The words that state the rule
A road or bridge contract may contain a provision requiring a party to the contract to indemnify, hold harmless, or defend another party, but only to the extent that liability, damages, losses, or costs are caused by the negligence, wantonness, recklessness, or intentional conduct of the indemnifying party or the indemnifying party’s officers, employees, or agents.
- statuteAla. Code § 39-9-2enactment date not established
The words that state the rule
As used in this chapter, the following words have the following meanings: (1) PARTY. A private business or individual that is a party to a road and bridge contract. The term does not include the Department of Transportation, a county commission, or any other governmental awarding authority. (2) ROAD OR BRIDGE CONTRACT. A contract or a subcontract for the planning, construction, repair, reconstruction, replacement, rehabilitation, or improvement of any road or bridge and financed in whole or in part by state, county, municipal, or federal funds. This definition does not include any contract for the installation, construction, repair, replacement, relocation, or maintenance of facilities or equipment of a utility or located on utility infrastructure in public road or bridge rights-of-way.
- statuteAla. Code § 39-9-5enactment date not established
The words that state the rule
A road or bridge contract may not require a party to the contract to provide insurance coverage to another party as an additional insured for claims that arise out of or are caused by the second party’s own negligent, reckless, wanton, or intentional conduct or that of its officers, employees, or agents. Any additional insured coverage required under a road or bridge contract may not be broader than the scope of indemnity provided for in Section 39-9-3 or Section 39-9-4.
- statuteAla. Code § 39-9-6enactment date not established
The words that state the rule
This chapter does not apply to indemnity of a surety by a principal on a construction contract bond or to indemnity of an insurer’s obligations to its insureds.
- statuteAla. Code § 41-9A-3enactment date not established
The words that state the rule
As used in this section, the term “design professional” means a person or entity who is licensed or authorized in this state to practice architecture, landscape architecture, surveying, engineering, interior design, or geology.
- statuteAla. Code § 41-9A-3enactment date not established
The words that state the rule
(b) A provision of a contract for the professional services of a design professional entered into after July 1, 2021, is void and unenforceable if it does any of the following: (1) Requires the design professional to indemnify or hold harmless a contracting party, an indemnitee, or a third party against liability for damage other than liability for damage to the extent caused by, or in proportion to the extent the design professional participates in resolution of a claim based on, an act of negligence, recklessness, intentional tort, intellectual property infringement, or failure to pay a subconsultant or supplier that is committed by the design professional or the design professional’s agent, consultant under contract, or other entity for which the design professional is legally liable. (2) Requires the design professional to defend a contracting party, an indemnitee, or a third party against a claim arising out of the rendering of or failure to render professional services by the design professional or its agents that is not otherwise covered by the design professional’s policy of professional liablity insurance. (3) Requires the design professional to list a party or any other person or entity as an additional insured on the design professional’s policy of professional liability insurance. (4) Subjects the design professional to a standard of care different than that provided under subsection (d).
- statuteAla. Code § 41-9A-3enactment date not established
The words that state the rule
(c) Nothing in this section voids a provision of a contract for the professional services of a design professional to the extent that it includes any or all of the following: (1) A requirement that the design professional list an additional insured on the design professional’s general liability insurance policy, automobile liability insurance policy, or both, and provide coverage and any defense provided by those policies. (2) A provision for the reimbursement of a contracting party’s or an indemnitee’s reasonable attorney fees, damages, losses, injuries, or other litigation costs in proportion to the design professional’s liability, or in proportion to the extent the design professional participates in resolution of a claim also made against the contracting party or indemnitee. (3) A provision or requirement not otherwise in conflict with subsection (b).
- statuteAla. Code § 41-9A-3enactment date not established
The words that state the rule
(d)(1) A contract for the professional services of a design professional shall require the design professional to perform the services with the professional skill and care ordinarily provided by a competent design professional practicing under the same or similar circumstances and professional licenses as expeditiously as is prudent considering the ordinary professional skill and care of a competent design professional. (2) If a standard of care provision in a contract differs from the skill and care required under subdivision (1), the standard of care provided in subdivision (1) shall apply.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.