Will this indemnity clause make the other side pay for losses caused by our own negligence?
Outside construction, usually yes. Absent specified public policy exceptions, the law of Ohio generally allows enforcement of indemnity agreements (Glaspell). Inside construction, R.C. 2305.31 makes void, as against public policy, a covenant in or collateral to a contract relative to the design, planning, construction, alteration, repair, or maintenance of a building, structure, highway, road, appurtenance, and appliance, including moving, demolition, and excavating connected therewith, under which the promisee has hired the promisor to perform work, purporting to indemnify the promisee against liability for damages arising out of bodily injury to persons or damage to property proximately caused by or resulting from the negligence of the promisee (Kendall, quoting the section). Kendall holds that R.C. 2305.31 applies to such agreements regardless of whether the negligence is sole or concurrent, and that voluntariness and equal bargaining power between sophisticated commercial parties will not save an agreement the section makes void. Kendall also decided a second question that an indemnity clause cannot reach by general words: an employer complying with the workers' compensation laws does not surrender its statutory and constitutional immunity from suits arising out of employment absent an express and specific waiver of that immunity, and a general agreement of indemnity with a third party is ineffective for that purpose. Glaspell names a second statutory void outside construction - R.C. 4123.82, on employment contracts.
The trap
Where the statute does not reach, the drafting question is construction, and Glaspell's answer cuts both ways. Where it is alleged that the agreement protects an indemnitee from the financial consequences of his own negligence, the greater weight of authority in Ohio would construe the words of such an agreement most narrowly, but Glaspell held that narrow construction is not required where the burden of indemnification was assented to in a context of free and understanding negotiation between commercial enterprises of sufficient size and quality as to presumably possess a high degree of sophistication in matters of contract, each able to provide against loss by insurance. So the same words can be read strictly against a party with no realistic opportunity to bargain and generously between two sophisticated businesses, and it is the bargaining record, not the wording, that decides which.
8 authorities
The words that state the rule
The first issue presented in this appeal is whether R.C. 2305.31 prohibits only those indemnity agreements in construction-related contracts whereby the promisor agrees to indemnify the promisee for damages caused by or resulting from the sole negligence of the promisee. We hold that this statute applies to such agreements regardless of whether the negligence is sole or concurrent.
The words that state the rule
In particular kinds of circumstances, Ohio has forbidden enforcement of indemnity agreements. See, e.g., R.C. 2305.31 and Kendall v. U.S. Dismantling Co. (1985), 20 Ohio St. 3d 61 , 20 OBR 360, 485 N.E. 2d 1047 (construction contracts); R.C. 4123.82 and Ledex, Inc. v. Heatbath Corp. (1984), 10 Ohio St. 3d 126 , 10 OBR 449, 461 N.E. 2d 1299 (employment contracts). However, absent specified public policy exceptions, the law of Ohio generally allows enforcement of indemnity agreements.
The words that state the rule
Thus, while clauses limiting the liability of the drafter are ordinarily to be strictly construed, we need not do so when- such burden of indemnification was assented to in a context of free and understanding negotiation.
The words that state the rule
R.C. 2305.31 provides in pertinent part: “A covenant, promise, agreement, or understanding in, or in connection with or collateral to, a contract or agreement relative to the design, planning, construction, alteration, repair, or maintenance of a building, structure, highway, road, appurtenance, and appliance, including moving, demolition, and excavating connected therewith, pursuant to which contract or agreement the promisee, or its independent contractors, agents or employees has hired the promisor to perform work, purporting to indemnify the promisee, its independent contractors, agents, employees, or indemnities against liability for damages arising out of bodily injury to persons or damage to property initiated or proximately caused by or resulting from the "negligence of the promisee, its independent contractors, agents, employees, or indemnities is against public policy and is void. * * *” (Emphasis added.)
The words that state the rule
Where it is alleged that the agreement protects an indemnitee from *47 the financial consequences of his own negligence, the greater weight of authority, particularly in Ohio, would construe the words of such an agreement most narrowly.
The words that state the rule
Appellant’s plea that courts should enforce voluntary, arm’s-length agreements between sophisticated commercial parties is also unavailing. R.C. 2305.31 clearly announces that agreements such as the one at bar are void as against public policy. The voluntariness of the agreement, or the equality of the parties’ bargaining power, if such equality exists here, will not save an agreement that is statutorily void.
The words that state the rule
Further, our holding today is consistent with the well-established rule that “[contracts of indemnity purporting to relieve one from the results of his negligence must be construed strictly.” Kay v. Pennsylvania RR. Co. (1952), 156 Ohio St. 503 [ 46 O.O. 417 ], paragraph one of the syllabus.
The words that state the rule
Accordingly, we hold that an employer in compliance with the workers’ compensation laws of this state does not surrender its statutory and constitutional immunity from suits arising out of employment absent an express and specific waiver of that immunity. A general agreement of indemnity with a third party which does not specifically express the employer’s intent to waive this particular immunity is ineffective for that purpose.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.