Death of “Type 1” Indemnity in California Construction

For many years the prevalence of the “Type 1” indemnity clause has been the subject of fierce debate within the construction industry.  Subcontractors have complained that they are saddled with indemnity obligations that require them to indemnify contractors from construction-related claims for which these subcontractors are truly not responsible.  In defense, contractors have argued that they must be entitled to the freedom to set contractual terms to best protect themselves and they point out that subcontractors are certainly free to negotiate better terms or turn down work.

After many years of debate and small legislative inroads in prohibiting Type 1 indemnity in residential projects and where it concerns the “sole negligence”, “willful misconduct” or the “design defects” of others, the California legislature has finally spoken broadly and definitively on the issue of Type 1 indemnity clauses in construction contracts.  Under new Civil Code section 2782, beginning with contracts entered into on or after January 1, 2013, broad “Type 1” indemnity clauses shall be void and unenforceable in the context of both private and public construction projects in California.  Civil Code section 2782 now makes it clear that subcontractors can no longer be required to indemnify against another’s active negligence in connection with construction contracts, whether public or private.