Governor DeWine will likely soon be signing into law Senate Bill 56, which will prohibit indemnity clauses in public contracts that make architects, engineers, and other designers responsible for the negligence of others.
Referred to by some as the “Indemnification Bill,” the new law, among other things, creates Section 153.81 of the Ohio Revised Code. In short, the law limits the liability of design professional firms that work on public improvements (and their subcontractors) to only their share of the tortious conduct that led to third-party death or injury. The new law does not impact contracts between private owners and their consultants and designers. SB56 also does not lower any duty or standard of care by design professionals at any level.
Concerns about broad-form indemnity requirements are that, where they exist, the indemnifying party could potentially be on the hook for 100% of damages, even if their actual responsibility for the damage was something much less.
Indemnity provisions in government contracts are often broad. An example of such language can be found in Section 7.2 of the OFCC A/E Standard Terms and Conditions, which states:
7.4.2 Professional Liability. To the fullest extent permitted by Applicable Law and with respect to professional liability claims, the A/E shall indemnify and hold harmless the State, Contracting Authority, Owner, and their respective officers, officials, and employees from and against all claims, costs, damages, losses, fines, penalties, and expenses (including but not limited to all fees and charges of attorneys and other professionals, and all court, arbitration, or other dispute resolution costs) arising out of or in connection with (1) the failure of the A/E or a Person for whom the A/E is legally liable to comply with the standard of care described under Section 1.9; and (2) infringement of patent rights or copyrights by the A/E or a Person for whom the A/E may be liable.
Under the new law, such indemnification will likely have some express limitations as they are applied to the “death of or injury to a third party.” There will be different ways to address these limitations. One way for the above paragraph could simply be to add an additional sentence onto the end that says something like:
Nothing in this agreement will require the A/E to provide indemnification that would be in violation of the provisions found in R.C. 153.81.
This change in Ohio law builds on the protections against broad-form indemnity that designers, contractors, and subcontractors have enjoyed since 1975, by limiting a designer’s indemnification obligation for public contracts to indemnity for a third-party’s bodily injury, death, or property damage.
