HBA-NRS H.B. 2836 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 2836
By: Dukes
Civil Practices
4/10/2001
Introduced



BACKGROUND AND PURPOSE 

Currently, owners of real property are requiring general contractors hired
under a construction contract to assume liability for the owner's
negligence for damages relating to the property. Therefore, in the case of
an accident for which the owner is truly responsible, the general
contractor may be legally responsible for the damages. Similarly, a general
contractor may transfer liability to a subcontractor so that the
subcontractor is held liable even though the subcontractor may have been
uninvolved in the accident. The net effect of transferring liability from
one party to another may  result in a person who can least afford to pay
for damages being held liable for another person's mistake or negligence.
House Bill 2836 provides that each party that improves real property under
a construction contract is liable for the party's negligence and prohibits
the transfer of liability by contract or by other means. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

ANALYSIS

House Bill 2836 amends the Civil Practice and Remedies Code to provide that
a covenant, promise, agreement, or understanding contained in a
construction contract, or in an agreement collateral to or affecting a
construction contract, is void and unenforceable if it indemnifies, holds
harmless, or defends a person against loss or liability for damage that is
caused by or results from the sole or concurrent negligence of the
indemnitee, its agent or employee, or an independent contractor, other than
the indemnitor, directly responsible to the indemnitee, and arises from
damages resulting from or as part of a construction project. The bill
authorizes that a covenant, promise, agreement, or understanding contained
in a construction contract, or in an agreement collateral to or affecting a
construction contract to provide for a person to indemnify, hold harmless,
or defend another person against loss or liability for damage that is
caused by or results from the negligence of the indemnitee or its agent or
employee and arises from the bodily injury or death of an employee or the
indemnitor, the indemnitor's contractor or supplier, any lower-tier
subcontractor or supplier of the indemnitor's subcontractor, or an
independent contractor directly responsible to one of these persons. 

The bill prohibits liability for agreements under construction contracts
that indemnify, hold harmless, or defend to exceed the coverage and dollar
limits of insurance, including qualified self-insurance, that the
indemnitor has agreed to provide under a construction contract or
agreement. The bill provides that indemnity provisions in certain
construction contracts do not affect the validity and enforceability of
insurance contracts, workers' compensation laws, or statutory rights of
contribution. The bill sets forth provisions relating to certain
construction contracts to which these provisions do not apply. The
provisions of this bill may not be waived by a contract or otherwise.  

EFFECTIVE DATE

September 1, 2001.