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Become familiar with ‘scope of work’ and indemnity in contract agreements

Understanding those terms can limit liability

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Subcontractors may be unaware they can review and negotiate subcontracts before signing them.

Negotiating can be as simple as "red lining" words to delete from the document or adding words or sentences.

Two important items that should be thoroughly reviewed before signing any subcontract agreement are the “scope of work” and “indemnification” clauses. The scope of work should be clearly defined and is usually one of the first paragraphs of the subcontract. 

Indemnity is a contractual obligation of one party to compensate for the loss incurred by another party due to the acts of a third party or one's own actions.

Limit your risk in contracts with help from new ATSSA group

Register now for Nov. 8 webinar on ‘Leveling the playing field’

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The overreaching contractual obligation to assume responsibility for another party beyond the extent of your own negligence or willful misconduct is unreasonable and a clear and present danger to the roadway safety infrastructure industry.  

Michael Capell of Brown & Brown recently listened while an ATSSA member shared an experience, recounting the unsettling details of a lawsuit that altogether changed his approach to every project.  For this member, had it not been for a negotiated settlement in exchange for a full release, a jury award would have easily exceeded the company’s available limits of liability insurance and forced a sell-off of corporate assets. The hard-to-swallow reality of the matter was that his involvement was simply a consequence of a far-reaching contractual obligation. 

The business survived, with the experience serving as an endless reminder to never again roll over for blanket contractual risk shifting. This member now fires back, many times successfully negotiating a narrowed responsibility that is fairly and appropriately aligned with his company’s presence on a project, something previously thought unachievable.

These circumstances are all too familiar and place high priority for the continued drive for awareness and education of the issues, contract review protocols and a push for legislative changes.

A new group of ATSSA members and volunteers has formed to assist members and will be presenting a webinar on Nov. 8 and a panel at the 2023 Convention & Traffic Expo in Phoenix.