The State of Michigan has amended the law governing indemnity contracts relative to construction projects. The existing law, MCL 691.991, currently provides as follows:
"A covenant, promise, agreement or understanding in, or in connection with or collateral to, a contract or agreement relative to the construction, alteration, repair or maintenance of a building, structure, appurtenance and appliance, including moving, demolition and excavating connected therewith, purporting to indemnify the promisee against liabilty for damages arising out of bodily injury to persons or damage to property caused by or resulting from the sole negligence of the promisee or indemnitee, his agents or employees, is against public policy and is void and unenforceable."
The new P.A. 2012, No. 468 was approved by Governor Snyder late last month. It goes into effect on March 1, 2013 and amends MCL 691.991 in several important respects.
First, it broadens the range of construction activities to which the statute will apply. As of March 1, 2013, the statute will also apply to indemnity agreements relative to the:
First, it broadens the range of construction activities to which the statute will apply. As of March 1, 2013, the statute will also apply to indemnity agreements relative to the:
". . . design, construction, alteration, repair, or maintenance of . . . a building, structure, an appurtenance, an appliance, a highway, road, bridge, water line, sewer line, or other infrastructure, or any other improvement to real property, including moving, demolition, and excavating connected therewith, . . . ." [Emphasis added.]
The new act also limits the extent to which public entities can require other contracting parties to defend and/or indemnify them and/or the other contracting parties. Currently, MCL 18.1237c prohibits Michigan's Dept. of Management & Budget from requiring an "architect, professional engineer, or contractor" to "assume any liability" or to indemnify the state "for any amount greater than the degree of fault" of the respective architect, engineer, etc. when contracting for a "capital outlay project, capital improvement or facility, . . . ."
The new P.A. 2012. No. 468 incorporates the general principles of MCL 18.1237c, and expands their application. It also provides protection to Michigan-licensed architects, professional engineers, landscape architects, and professional surveyors that it doesn't provide to those licensed outside the state. It states:
The new P.A. 2012. No. 468 incorporates the general principles of MCL 18.1237c, and expands their application. It also provides protection to Michigan-licensed architects, professional engineers, landscape architects, and professional surveyors that it doesn't provide to those licensed outside the state. It states:
"(2) when entering into a contract with a Michigan-licensed architect, professional engineer, landscape architect, or professional surveyor for the design of a building, a structure, an appurtenance, an appliance, a highway, road, bridge, water line, sewer line, or other infrastructure, or any other improvement to real property, or a contract with a contractor for the construction, alteration, repair, or maintenance of any such improvement, including moving, demolition, and excavating connected therewith, a public entity shall not require the Michigan-licensed architect, professional engineer, landscape architect, or professional surveyor or the contractor to defend the public entity or any other party from claims, or to assume any liability or indemnify the public entity or any other party for any amount greater than the degree of fault of the Michigan-licensed architect, professional engineer, landscape architect, or professional surveyor, or the contractor and that of his or her respective subconsultants or subcontractors. A contract provision executed in violation of this section is against public policy and is void and unenforceable."
The term "public entity" is defined by P.A. 2012, No. 468 as:
"this state and all agencies thereof, any public body corporate within this state and all agencies thereof, and any nonincorporated public body within this state of whatever nature and all agencies thereof; including, but not limited to, cities, villages, townships, counties, school districts, intermediate school districts, authorities, and community and junior colleges as provided for in section 7 of article VIII of the state constitution of 1963, and their employees and agents, including, but not limited to, construction managers or other business arrangements retained by or contracting with the public entity to manage or administer the contract for the public entity."
It should be noted, however, that the new act specifically exempts from these provisions, "institutions of higher education as described or provided for in section 4 or 6 of article VIII of the state constitution of 1963, or their
employees or agents."
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employees or agents."
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