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SPONSOR: |
Leavell |
DATE TYPED: |
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HB |
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SHORT TITLE: |
Void Certain Indemnification Agreements |
SB |
280/aSCORC/aSJC |
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ANALYST: |
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APPROPRIATION
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Appropriation
Contained |
Estimated
Additional Impact |
Recurring or
Non-Rec |
Fund Affected |
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FY03 |
FY04 |
FY03 |
FY04 |
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NFI |
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(Parenthesis
( ) Indicate Expenditure Decreases)
Responses
Received From
State
Highway and Transportation Department (SHTD)
Attorney
General’s Office (AGO)
Regulation
& Licensing Department (RLD)
SUMMARY
Synopsis of SJC
Amendment
The Senate Judiciary Committee Amendment removes
agreements for alterations, construction, maintenance and repair from the
definition of a construction contract as it is used in SB 280.
Synopsis
of SCORC Amendment
The Senate Conservation & Transportation
Committee amendment clarifies that Section 1 of SB 280 does not address surety
bonds. The other changes in this amendment are drafting issues.
Synopsis
of Original Bill
Senate Bill 280
replaces the language in the current NMSA 1978, Section 56-7-1 with entirely
new language voiding certain indemnification provisions in construction
contracts and adding a new definition for “construction contract”. SB 280 also extends the prohibition in NMSA
1978, Section 56-7-2 to include both foreign and domestic indemnification
provisions in agreements relating to wells and mines in
Significant
Issues
SB 280 amends Section
56-7-1 making void only those indemnity agreements relating to bodily injury or
property damage as found in construction contracts. Given the general rule that indemnification
agreements in construction contracts are void, SB 280 further makes an exception
to allow such indemnification agreements addressing matters other than bodily
injury or property damage.
SB 280 also excepts a
contract provision requiring a party to purchase a project-specific insurance
policy.
SB 280 does not apply
to construction contract bonds.
ADMINISTRATIVE
IMPLICATIONS
SHTD’s
current construction contracts already substantially comply with the proposed
requirements in SB 280, but SHTD may need to modify the indemnity/hold harmless
language.
TECHNICAL ISSUES
SHTD notes Subsection B contained in Section 1
of SB 280 provides exceptions to the prohibition against indemnity/hold
harmless provisions in construction contracts only to the extent the contract
contains a provision that:
(1) requires that one
party to the contract is only indemnifying or holding the other party harmless
for acts or omissions of the indemnitor, or
(2) requires a party
to the contract to purchase a project-specific insurance policy.
SHTD’s construction contracts currently have
provisions that require both (1) and (2).
It is un-clear from the use of the word “or” at the end of subsection
B(1) in the bill if it is allowable for a construction contract to have
provisions addressing both exceptions (1) and (2), or if the intent of the bill
is that the construction contract may contain a provision that addresses only
one of the exceptions, but not both. This needs to be clarified.
DW/yr/njw:yr