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.