Obligations Arising From Particular TransactionsIndemnity
Section § 2772
Indemnity is a kind of agreement where one person promises to protect someone else from being legally responsible for another's actions, or their own.
Section § 2773
This law says that if you make an agreement to protect someone from the consequences of doing something illegal, that agreement isn't valid if the person knows it's illegal at the time they're doing it.
Section § 2774
This law says you can make an agreement to protect someone from the consequences of something they've already done, even if that act was wrong, as long as it wasn't a felony. So basically, covering for past actions is okay unless those actions were super serious crimes.
Section § 2775
This law states that if you agree to cover someone else’s actions, you’re also responsible for covering what their agents do as well.
Section § 2776
If you make an agreement to cover or protect multiple people from loss or damage (that's what indemnify means), the default rule is that this protection applies to each person separately, unless your agreement specifically says otherwise.
Section § 2777
If someone agrees to cover or protect another person against a specific action, they can be held responsible along with that person for any harm caused by the action.
Section § 2778
This law explains how to interpret indemnity contracts, which are agreements that provide protection against potential losses or liabilities. Key points include: If you're indemnified against being liable, you can seek compensation as soon as you're liable. If you're indemnified against claims or demands, you need to pay first before getting compensated. Indemnity covers costs of defense if done in good faith. An indemnifier must defend the person they protect if asked but the protected person may choose to handle their own defense. If the indemnifier fails to defend, their responsibility is established if the protected party faces losses in good faith. However, if the indemnifier wasn't aware of the need for defense or couldn't manage it, the judgment is only presumptive evidence. If the indemnifier had a strong defense but didn't apply it due to neglect, the judgment isn't binding on them.
Section § 2779
If you agree to cover the costs if someone else fails to uphold their duty, you have the right to be paid back like someone who co-signs a loan. This applies whether you know the exact amount you'll have to pay or not.
Section § 2782
This law is about how responsibility for mistakes and accidents is shared in construction contracts in California. It says that if you're contracting for construction work, you can't hold someone else responsible for your own big mistakes or negligence. This applies to both private property owners and public agencies, whether they're building something new or fixing something old. If there’s a mistake caused by a contractor or subcontractor, they have to address it if it's related to their work. The law also outlines how defense costs should be handled and what happens if someone fails to meet their responsibilities. Finally, it explains that you can still seek compensation from other parties involved, like suppliers or designers, but only if it’s fair and related to the issues at hand.
Section § 2782.1
This law says a contractor working on a construction project can agree to protect someone else, like a company or property owner, from any problems that might arise when allowing the contractor onto their property, even though the construction isn't for them.
Section § 2782.2
This law allows an agreement to indemnify, or protect, professional engineers from liability for their negligence when they provide inspection services at plants or facilities, but certain conditions must be met. The plant owner must be the one making this promise, and they must be financially stable, with an annual audit showing a net worth over $10 million. They need to be self-insured, and the indemnity doesn't cover the first $250,000 of any liability. Importantly, indemnity for willful misconduct is not allowed.
Section § 2782.05
This law makes certain parts of construction contracts invalid if they try to make subcontractors cover problems that are the fault of general contractors, construction managers, or others responsible. It affects contracts from 2013 onwards. It outlines when subcontractors can be asked to defend a claim and how costs for this defense get shared. Some types of contracts and insurance policies aren't affected by this law, like residential construction contracts and insurance that is required by certain contracts. California law must apply to these contracts, and any attempt to waive the law's requirements is void. Contractors and subcontractors can negotiate some terms like the timing of defense costs but can't change the fundamental protections the law provides.
Section § 2782.5
This law allows the parties involved in a construction contract to negotiate and agree on how they will handle responsibility for problems. Specifically, they can decide among themselves who takes the blame for design defects or issues related to the promises made in the contract.
Section § 2782.6
This law allows engineers or geologists to be indemnified, or protected from liability, in certain cases when dealing with hazardous materials. The indemnity is valid when the work focuses on underground contamination or hidden hazards, and the person requesting the indemnity is responsible for the contamination. However, this protection does not cover the first $250,000 in damages and doesn't apply if there has been gross negligence or intentional wrongdoing. The term 'hazardous materials' encompasses a wide range of substances, like toxic chemicals, petroleum, and asbestos, regulated by state or federal law. Importantly, this law doesn’t apply to public entities and doesn’t change the liability for death, injury, or property damage to other people.
Section § 2782.8
This law, effective from January 1, 2018, states that when a design professional, like an architect or engineer, signs a contract, they cannot be required to cover legal defense costs for claims against the other party unless the claims are due to their own negligence or misconduct. Even then, the cost they must pay is limited to their share of the fault. The law also ensures these protections cannot be changed by agreement. Contracts must automatically include these terms. However, it doesn't apply if the project has a general liability policy covering everyone or in joint ventures. Importantly, state agencies aren't included in these protections.
Section § 2782.9
If a residential construction project uses a wrap-up insurance policy, any contract clauses requiring subcontractors to cover claims that the insurance already covers are not valid. If these clauses are invalid, parties can still seek 'equitable indemnity,' meaning they may ask others to help pay for a claim unless the insurance covers it. Builders can request subcontractors to contribute to a deductible but must clearly outline this in the contract. The amount a subcontractor pays should be fair and relate to any issues they are alleged to cause. Builders must notify subcontractors in writing of any required payments, and the total collected can't exceed the deductible. Parties can't change or ignore this law by agreement.
Section § 2782.95
This law deals with wrap-up insurance policies for private residential construction projects that started after January 1, 2009. The owner, builder, or contractor must clearly disclose any insurance premium credits or costs that subcontractors must pay in the contract. They also need to share details about the insurance policy, such as limits, coverage, and terms, and provide estimated available insurance limits. Subcontractors have the right to see the actual policy or insurance binder, and those who receive such documents have limitations on sharing them. If a subcontractor wasn't told about specific insurance cost details before bidding, they are allowed to adjust their bid regarding those costs.
Section § 2782.96
If a public work project, or any non-residential project, is using a wrap-up insurance policy, there are certain rules to follow. If subcontractors have to pay part of the insurance premium, this cost must be clearly outlined in the bid documents. Information about the policy, like coverage limits and exclusions, must be shared with those covered by the policy. However, if no additional cost is passed on to subcontractors, these disclosure rules don't apply. Also, anyone privy to the insurance details must keep it confidential unless legally obligated to share it.
Section § 2783
This section clarifies what a 'construction contract' includes for certain California laws. It covers any deal, whether written or spoken, about building or changing structures or infrastructure like buildings, roads, or utilities. It also includes related activities like equipment rental and services such as surveying, design, demolition, or maintenance.
Section § 2784
This law section explains what a 'design defect' means. It is a problem that occurs because of how something is planned or designed, making a building, machine, or equipment unsafe or unsuitable for its intended purpose, even if it is built according to the design.
Section § 2784.5
This law says that in any trucking or hauling contract, you can't promise to cover someone's costs if they are found completely at fault for causing injury, death, or property damage because of their negligence or intentional bad actions. However, this rule doesn't apply if insurance agreements or workers' compensation insurance are involved. Basically, you're on your own if you're the one at fault, unless insurance steps in.