HBA-NRS H.B. 2836 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2836 By: Dukes Civil Practices 4/10/2001 Introduced BACKGROUND AND PURPOSE Currently, owners of real property are requiring general contractors hired under a construction contract to assume liability for the owner's negligence for damages relating to the property. Therefore, in the case of an accident for which the owner is truly responsible, the general contractor may be legally responsible for the damages. Similarly, a general contractor may transfer liability to a subcontractor so that the subcontractor is held liable even though the subcontractor may have been uninvolved in the accident. The net effect of transferring liability from one party to another may result in a person who can least afford to pay for damages being held liable for another person's mistake or negligence. House Bill 2836 provides that each party that improves real property under a construction contract is liable for the party's negligence and prohibits the transfer of liability by contract or by other means. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS House Bill 2836 amends the Civil Practice and Remedies Code to provide that a covenant, promise, agreement, or understanding contained in a construction contract, or in an agreement collateral to or affecting a construction contract, is void and unenforceable if it indemnifies, holds harmless, or defends a person against loss or liability for damage that is caused by or results from the sole or concurrent negligence of the indemnitee, its agent or employee, or an independent contractor, other than the indemnitor, directly responsible to the indemnitee, and arises from damages resulting from or as part of a construction project. The bill authorizes that a covenant, promise, agreement, or understanding contained in a construction contract, or in an agreement collateral to or affecting a construction contract to provide for a person to indemnify, hold harmless, or defend another person against loss or liability for damage that is caused by or results from the negligence of the indemnitee or its agent or employee and arises from the bodily injury or death of an employee or the indemnitor, the indemnitor's contractor or supplier, any lower-tier subcontractor or supplier of the indemnitor's subcontractor, or an independent contractor directly responsible to one of these persons. The bill prohibits liability for agreements under construction contracts that indemnify, hold harmless, or defend to exceed the coverage and dollar limits of insurance, including qualified self-insurance, that the indemnitor has agreed to provide under a construction contract or agreement. The bill provides that indemnity provisions in certain construction contracts do not affect the validity and enforceability of insurance contracts, workers' compensation laws, or statutory rights of contribution. The bill sets forth provisions relating to certain construction contracts to which these provisions do not apply. The provisions of this bill may not be waived by a contract or otherwise. EFFECTIVE DATE September 1, 2001.