Helping Engineering Firms Limit Their Risks in Contracts
Broad-form indemnification and the duty to defend are critical issues for engineering firms undertaking professional service contracts. Each poses a significant risk to the engineering firm and could result in unfair damages. Learn more about these important legal terms, and join ACEC in urging states to make broad-form indemnification and the duty to defend void and unenforceable in engineering contracts.
Read the Whitepaper
Read the ACEC Risk Management Committee's whitepaper on Indemnification and the Duty of Defend.
What is broad-form indemnification?
What does it mean when a contract requires the engineer or another design professional to “indemnify” a client? It means “to compensate for a loss.”
For example, in a contract for engineering services, an indemnification clause might ask for compensation for damages caused by the engineer’s professional negligence. This is typically acceptable since professional liability insurance covers that risk.
The problem is that the indemnification clause could open the door to much broader and more dangerous financial risk.
Unreasonable indemnification clauses may ask engineers to take financial responsibility for their actions, whether negligent or not - or even damages just “related” to their work. Such clauses may even require the engineer to pay for damages caused by other parties.
This is called “broad-form indemnification,” it’s unfair and should not be allowed in any design-professional contracts.
Download the infographic
Download our infographic on broad-form indemnification.
The duty to defend
Some engineering contracts call for an engineer or another design professional to pay a client's legal expenses even if the engineer didn’t do anything wrong. This is fundamentally unfair.
The only way to protect all design professionals from this financially devastating risk is to do what a number of states have done already: pass a law to make the “duty to defend” contractual provision void and unenforceable.
Learn more about the dangers of the “duty to defend” in engineering contracts.
Download the infographic
Download our infographic on the duty to defend in engineering contracts.
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