Anti-Indemnity Statute

  

Categories: Regulations, Tax

Let's break it down. "Indemnity" means not having a legal responsibility for something. "Anti" is the opposite of something. A "statute" is a law. So the anti-indemnity statute prevents the elimination of legal responsibility for particular parties (it feels like there's a double-negative involved there).

Generally, the anti-indemnity statute is used in the construction business. A contractor hires a subcontractor and attempts to get the subcontractor to take on any risk associated with the project, legal responsibility for things like accidents and safety. The contractor wants indemnity against being sued if something goes wrong.

Anti-indemnity statutes prevent this from happening, at least to some extent. Basically, they put a limit on this indemnity and say that some legal responsibility still rests with the original contractor, whatever it says in the contract they signed with someone else.

The scope of these laws vary from state to state. For instance, DC (which we know isn't technically a state, but still) doesn't have any anti-indemnity statutes on the books (as of 2016). Meanwhile, California is one of the few states that prohibits both broad and intermediate indemnity. This according to a report put out by Matthiesen, Wickert & Lehrer.

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