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.