Legal Question in Construction Law in California

Re: Indemnification

Let me add an alternative slant to the sound words provided by Mr. Whipple.

I want to make sure I understand your question. As I read it, you and the owner "agreed to agree", i.e., you agreed that you would enter into a contract for construction. Somehow, though, before actually entering into the contract, the owner issued a Notice to Proceed that included language of indemnification, which I presume, would work to your benefit. Now, however, its time to sign the actual construction contract, but the owner refuses to indemnify you.

If I have the facts right, I'm a bit concerned about the fact that the cart seems to be before the horse - a Notice to Proceed issued before actual contract documents are signed. I know things of this nature happen, but it does muddy the waters. Also, it's difficult to give a comprehensive answer without an actual review of the documents. Thus, I'm unfortunately forced to answer your question with a question.

Mr. Whipple mentioned an "integration clause". Many contracts are written with integration clauses that are NOT cumulative. In the contract in question, do you see a provision anywhere that, in essence, states "� this contract is the full and final agreement of the parties, and that any prior negotiations, representations etc., whether verbal or written are of no force and effect � "?

If so, and if indemnification becomes an issue down the line, you may find it difficult to enforce an indemnity agreement that does not lie within the four corners of the actual contract. In limited circumstances, you may be able to introduce "parol evidence", i.e., evidence that the contract does not adequately express the agreement of the parties, and that other evidence of intent should be introduced to allow for proper interpretation of the contract. Those circumstances, however, are rare. The intent of an integration clause is to avoid just that - introduction of evidence of the parties' intent that varies from the actual words they placed on paper.

If you want to fax or e-mail me the documents in question, I'd be happy to take a brief, emphasis on brief look at no charge and see if I can give you a more detailed answer. Please feel free to contact me by e-mail.

Best of luck with this.

Now the inevitable caveat:

The foregoing information is provided as an accommodation only, and does not constitute specific legal advice or a biding legal opinion based on a comprehensive review of all relevant facts, nor can provision of such information be construed as creating an attorney-client relationship.

Re: Indeminfication

To start off, I have to admit I don't really know the answer. If I could see all the contract documents, I might be able to give you an answer, but possibly not even then.

However, here are some observations that might be helpful:

First, as you may know, it is not uncommon in the heavy construction business for the work to begin (and sometimes get fairly far along) before the final contract is signed by everyone.

Second, many form contracts used in the construction industry contain integration clauses, saying that the contract documents are cumulative and provisions contained in any of the documents apply to the entire contract. This kind of language not only governs the interpretation of contracts that contain it, but also may affect the interpretation of contracts that don't so specify, since that kind of contract interpretation becomes a de facto industry standard.

So, I think it is more likely than not that an indemnity provision contained in a notice to proceed signed by the parties would be held to govern the entire contract, even if not recited in the formal contract.

However, as I say, I'm not sure. I looked briefly at about 20 California cases related to indeminty clauses in construction contracts and did not find anything specifically on point.

Finally, keep in mind that even where there is no express indemnity provision in the contract, a court may find an implied or equitable duty to indemnify another party to the contract.

I hope this is helpful. If questions remain, see a lawyer who is in a position to read all the documents.