Two Texas companies signed a drilling contract using a standard industry form that included mutual indemnity clauses requiring each party to cover the other's liability claims, even when caused by negligence. When a contractor's employee was injured during drilling in Kansas, a dispute arose over whether these broad indemnity provisions were enforceable. The Texas Supreme Court ruled that Kansas law applied and upheld the indemnity clause as valid and binding. This matters to subcontractors because it confirms that mutual indemnity agreements in construction contracts—especially those using standard industry forms—will be enforced by courts, even when they require you to cover the other party's negligence.
Mutual indemnity clauses in standard form contracts are enforceable, even if they require you to indemnify the other party for their own negligence—review these clauses carefully before signing.
Insurance requirements tied to indemnity obligations are enforceable; ensure your insurance limits match what the contract requires or you may face uninsured liability exposure.
The location where work is performed determines which state's law applies to your contract, so understand the governing law clause and how it affects your indemnity obligations.