Academy/Procurement, Bids & Contracts
Indemnity
What an indemnification clause actually promises, and why a broadly worded one is not automatically enforceable.
Indemnification is a contract clause where one party agrees to compensate the other for specified losses, such as a claim from a resident or worker. It is not insurance and not a warranty; it is a separate promise about who pays. A clause that tries to make a vendor cover the association's own negligence often will not hold up as written, because most states restrict how far indemnification can shift blame.
What an indemnification clause actually does
Every vendor contract of any size has one, usually buried a few pages in, and it is easy to skim past as boilerplate. It is not boilerplate. It decides who pays when a claim comes in, before anyone looks at what insurance either party happens to carry.
"To indemnify, also known as indemnity or indemnification, means compensating a person for damages or losses they have incurred or will incur related to a specified accident, incident, or event."
Source: Wex, "indemnify", Cornell Law School, Legal Information Institute
In a vendor contract, the indemnification clause decides who absorbs the cost of a claim, separately from what any insurance policy happens to cover. A landscaper's contract might say the vendor will indemnify the association for injuries caused by the landscaper's own crew. That is the ordinary, enforceable shape of the clause: each side answers for its own conduct.
Why "the vendor covers everything" clauses often don't hold up
Some vendor contracts go further and try to make the vendor indemnify the association for claims caused by the association's own negligence, a broken step the board knew about and never fixed, for example. That is where the clause gets fragile.
Most states have enacted anti-indemnity statutes that limit or prohibit enforcing exactly this kind of clause in construction contracts, and the scope of the restriction is not the same everywhere: some states void the clause only when the claim is entirely the association's fault, others void it whenever the association shares any of the blame, and some carry a narrower rule for architects and engineers than for contractors. Check your state's anti-indemnity statute, or ask counsel to, before you rely on broad indemnification language to cover your own board's mistakes.
A wide clause is not free insurance for board negligence. Courts in many states will simply decline to enforce the part of it that tries to be.
What to ask before you sign
Read the clause for three things: whose conduct triggers it, whether it tries to reach the association's own negligence, and whether it is paired with real insurance coverage rather than standing in for it. A certificate on file is not the same protection as an enforceable indemnification promise, and neither one substitutes for the other.
Bring the actual clause, not a summary of it, to an attorney licensed in your state before signing anything larger than a routine service order. Whether a specific sentence in your contract will hold up depends on your state's anti-indemnity rule, and that is a question worth a few hundred dollars of legal review before a claim ever tests it.
Check yourself
Answer before you read the explanation, recalling it is what makes it stick.
Your vendor contract says the landscaper will indemnify the association for "any and all claims, including those arising from the association's own negligence." A resident trips over a pothole the board knew about for months. What likely happens to that clause?
A board member says the association does not need an indemnification clause because the landscaper already has a certificate of insurance on file. What is the problem with that reasoning?
Counsel flags that a broadly worded indemnification clause covering the association's own negligence needs review before signing. Why does the answer depend on which state the association is in?
Sources
- Wex, "indemnify", Cornell Law School, Legal Information Institute
- Construction Anti-Indemnity Statutes, Saxe Doernberger & Vita, P.C.
Procurement, Bids & Contracts
Next, see how an indemnification clause works alongside the vendor's insurance coverage in Insurance clauses.
Whether an indemnification clause is enforceable, and how far it can shift the association's own negligence onto a vendor, depends on your state's anti-indemnity statute, and some states apply a narrower rule to design professionals than to other contractors.