Proposed Michigan Law Would Invalidate Certain Indemnity Obligations in Public Design and Construction Contracts

The Michigan House of Representatives and Senate have passed House Bill 5466 which, in part, would invalidate certain indemnity obligations in public design and construction contracts. Specifically, House Bill 5466 would prohibit a public entity from requiring architects, engineers, surveyors, and contractors in a design or construction contract to defend, assume any liability, or indemnify the public entity or any other party for any amount greater than their degree of fault or their subconsultants or subcontractors’ degree of fault.  Under House Bill 5466, “public entity” includes “construction managers or other business arrangements retained by or contracting with the public entity to manage or administer the [design or construction] contract for the public entity.” House Bill 5466, however, specifically excludes Michigan colleges or universities (as provided for in sections 4 or 6 of article VIII of the Michigan Constitution of 1963) from its definition of “public entity,” and thus, the invalidation contained in House Bill 5466 will not apply to these colleges or universities. It should also be noted that the invalidation contained in House Bill 5466 does not apply to indemnity provisions contained in contracts between a general contractor and its subcontractors or subcontractors and their sub-subcontractors on public projects.
In addition, Michigan law currently makes void and unenforceable an agreement in certain construction contracts purporting to indemnify a party against liability for damages arising out of bodily injury or damage to property caused by or resulting from the sole negligence of that same party. MICH. COMP. LAWS 691.991. House Bill 5466 would extend this law to certain design contracts and contracts involving the design, construction, alteration, repair, or maintenance of highways, roads, bridges, water lines, sewer lines, other infrastructure, or any other improvement to real property.
House Bill 5466 is awaiting signature by the Governor, and provided the Governor signs the bill, it will take effect March 1, 2013.
For the text of House Bill 5466, click here:
Related Practices & Industries