Diamond Offshore Co. v. A&B BUILDERS, INC.
75 F. Supp. 2d 676 | District Court, S.D. Texas | 1999
What This Case Means for Subcontractors
Diamond Offshore and A&B Builders had a contract with reciprocal indemnity language—meaning each party agreed to cover the other's losses, even from the other party's own negligence. A&B challenged whether this was legal. The court ruled that reciprocal indemnity agreements and additional-insured requirements are valid and enforceable under maritime law, even when they cover negligence. This matters to subcontractors because it means broad indemnity clauses in your contracts can be legally binding and you may be required to defend and pay for the other party's mistakes.
Key Takeaways
- •Reciprocal indemnity clauses covering negligence are enforceable in maritime contracts—don't assume they're void just because they seem one-sided.
- •Additional-insured requirements are valid; you must verify your insurance policies actually name the other party before signing the contract.
- •These clauses flow down through the contract chain, so review what obligations you're passing to your own subcontractors and suppliers.
Express contractual indemnity agreements generally are enforceable under maritime law.
Frequently Asked Question
Can a contract really make me pay for the other company's negligence?
Yes, according to this case. Reciprocal indemnity agreements that explicitly cover negligence are enforceable under maritime law. Before you sign any contract with broad indemnity language, have your insurance agent confirm your policies can cover those obligations, and consider negotiating limits on what negligence you'll indemnify.
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