A new bill proposed by Pennsylvania legislators would establish an "unprecedented" anti-indemnity statute regarding construction contracts, according to the Pennsylvania Business Review. Indemnity clauses transfer the responsibility to pay damages from one party to another.

“This is about fairness,” Rep. Todd Stephens said. “Without this legislation, many Pennsylvania construction contractors must accept liability for another party’s negligence. That can unfairly and unnecessarily add to the cost of a construction project.”

In construction law, there are three forms of indemnity agreements: limited, intermediate, and broad. The bill draws from limited indemnity, in which a subcontractor, if solely at fault, assumes responsibility for its own negligence.

“This legislation would mandate a limited form of indemnification to protect subcontractors, who are oftentimes the inferior bargaining power, from the superior bargaining power leveraged by owners and general contractors,” Rep. Michael Driscoll said. “It’s a matter of protecting construction contractors’ rights by equalizing the current liability power structure commonly seen in construction work.”

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