Contracts & ExecutionQuestion 883 of 1632

An 'indemnification' (hold harmless) clause in a construction contract generally requires one party to:

a.Compensate or defend the other against specified losses and claims
b.Extend the completion date whenever any claim is filed against it
c.Perform the other party's scope of work without extra charge
d.Give up its own right to be paid for the completed work

Explanation

An indemnity shifts the financial consequence of a claim from one party to another — the subcontractor agrees that if a third party sues the general over the sub's work, the sub carries it. California regulates construction indemnity heavily: Civil Code §2782 makes void any clause purporting to indemnify the promisee against liability arising from the promisee's OWN sole negligence or wilful misconduct, or for defects in design it furnished, and §2782.05 further limits Type I indemnity in most private construction subcontracts. (b) confuses indemnity with a time extension; indemnity moves money, not schedule. (c) and (d) describe giving away the work or the payment, which no indemnity does — the clause allocates the risk of THIRD-PARTY claims, not the parties' own exchange.

Law Reference: Civil Code §2782, §2782.05

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