By: Lindsay S.B. No. 1605
Line and page numbers may not match official copy.
Bill not drafted by TLC or Senate E&E.
A BILL TO BE ENTITLED
AN ACT
1-1 relating to certain criteria for enforceability of an
1-2 indemnification agreement or release agreement.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Subchapter D, Chapter 35, Business & Commerce
1-5 Code, is amended by adding Section 35.43 to read as follows:
1-6 Sec. 35.43. ENFORCEABILITY OF INDEMNIFICATION AGREEMENT OR
1-7 RELEASE AGREEMENT. (a) In this section:
1-8 (1) "Disclosure criterion" means a standard imposed to
1-9 draw attention to a particular term of an agreement or a
1-10 requirement that a particular obligation of a party to the
1-11 agreement be expressed by the use of particular language, including
1-12 a standard or requirement that:
1-13 (A) the term be set forth in print, type, or
1-14 another form of writing that is conspicuous, including as defined
1-15 by Section 1.201, Business & Commerce Code, or that is otherwise
1-16 designed to attract attention to the term;
1-17 (B) the obligation be expressed by the use of
1-18 particular words, including "negligence," "comparative negligence,"
1-19 "gross negligence" or "strict liability;"
1-20 (C) the agreement contain a statement of the
1-21 consequences of the particular term or that the parties intend
2-1 certain consequences; or
2-2 (D) the term or obligation meet another
2-3 criterion for notice or expression, regardless of whether the
2-4 criterion has been previously imposed by the courts of this state.
2-5 (2) "Indemnification agreement" means an agreement in
2-6 writing to defend, hold harmless or indemnify a party against an
2-7 existing or future loss, liability, cost, or expense, including
2-8 attorney's fees.
2-9 (3) "Indemnify" means defend, hold harmless or
2-10 indemnify.
2-11 (4) "Release agreement" means an agreement in writing
2-12 to release or otherwise excuse, in whole or in part, a party from
2-13 an existing or future liability.
2-14 (b) Except as provided in Subsection (c) or (d) of this
2-15 section, the legality, validity, or enforceability of an
2-16 indemnification agreement is not affected by the fact that all or
2-17 part of the indemnification agreement or a release agreement does
2-18 not meet a disclosure criterion.
2-19 (c) An indemnification agreement entered into on or after
2-20 September 1, 1997 does not require a party to indemnify against
2-21 loss, liability, cost, or other expense (including attorneys' fees)
2-22 to the extent any loss, liability, cost or expense (including
2-23 attorneys' fees) results from the indemnitee's future negligence
2-24 unless the contract that includes the indemnification agreement
2-25 contains a statement that the parties intend that result. A
3-1 provision substantially similar to the following satisfies the
3-2 foregoing requirement of this Subsection (c):
3-3 "The parties intend that the indemnification of
3-4 obligations contained in Sections _____ shall be
3-5 enforceable without regard to the indemnified parties'
3-6 negligence."
3-7 For purposes of this Subsection (c), no loss, liability, cost, or
3-8 expense (including attorneys' fees) shall be deemed to result (to
3-9 any extent) from a party's negligence unless the extent of
3-10 negligence is determined by a court at law having competent
3-11 jurisdiction or through binding mediation or arbitration.
3-12 (d) Subsection (b) of this section does not apply to an
3-13 indemnification agreement if the indemnitor is a consumer, as
3-14 defined in the Deceptive Trade Practices-Consumer Protection Act.
3-15 SECTION 2. This Act takes effect September 1, 1997, with
3-16 respect to agreements entered into on or after that date.
3-17 SECTION 3. The importance of this legislation and the
3-18 crowded condition of the calendars in both houses create an
3-19 emergency and an imperative public necessity that the
3-20 constitutional rule requiring bills to be read on three several
3-21 days in each house be suspended, and this rule is hereby suspended.