Contractual Liability For Schools… Making Smart - AGRiP：合同责任的学校……制作智能共同

1、Contractual Liability For SchoolsMaking Smart Choices and Finding the Negotiator WithinPresented by Jessica K. Walls, Esq.Isaac, Brant, Ledman & Teetor LLPAnd Schools of Ohio Risk Sharing Authority, Inc.So, What IS Negotiable?EVERYTHING is Negotiable!Remember who drafted the contract you are signing

2、. The provisions in a contract were put there for a reason, and it probably wasnt for your benefit.Topics: Contractual Liability and Risk ManagementRisk Transfer (Hold Harmless and Indemnity Agreements)Legalities of Political Subdivisions Assuming Risk“Additional Insured StatusWaivers of Subrogation

3、Contractual Risk Transfer StrategiesCOIs Function and MeaningCOIs ProblemsContractual Risk TransferOwnerGCSubSubRisk TransferHold Harmless and Indemnity ClausesHold Harmless: One party assumes an obligation to protect and defend anotherIndemnification: One party agrees to pay for losses or damages i

4、ncurred by another as a result of contract.Forms of Hold Harmless and Indemnity ClausesLimited Form. Assume responsibility only for your own negligence.i.e., “(A) shall indemnify and hold harmless (B) against all claims, damages and losses, arising out of or resulting from (A)s work under this Agree

5、ment, but only to the extent caused by (A)s negligence.Forms of Hold Harmless and Indemnity ClausesIntermediate Form. Assume responsibility for your sole negligence as well as negligence partly caused by your party.i.e., “(A) shall indemnify and hold harmless (B) against all claims, damages and loss

6、es, arising out of or resulting from (A)s work under this Agreement, that are caused in whole or in part by (A)s negligence, regardless of whether or not such loss is caused in part by a party indemnified hereunder.Forms of Hold Harmless and Indemnity ClausesBroad Form. Assume responsibility for neg

7、ligence, whether or not it is the fault of your party.i.e., “(A) shall indemnify and hold harmless (B) against all claims, damages and losses, arising out of or in any way related to (A)s work under this Agreement, even if such claims, damages or losses are caused by (B)s negligent act or omission.H

8、old Harmless ProvisionsThey are not the devil, but make sure you negotiate language you are comfortable with.Benefits:Spells out who is responsible for injury or damages arising out of the work performed.Provides a means for recovery if the contractors insurance does not cover the loss.Political Sub

9、divisions Have Limited Ability To Assume Risk Under The LawSchools and ESCs are political subdivisionsAmounts obligated under an indemnification or hold harmless clause must be appropriated and certified when the contract is made as required by R.C. 5705.41(D)(1) in order to avoid the creation of de

10、bt in violation of Ohio Const. art. XII, Section 11Hence, an school district or ESC cannot enter into a contract unless there is assurance that there will be adequate funds to meet the school district or ESCs obligations. A school district or ESC cannot satisfy this requirement if an indemnification

11、 or hold harmless clause included in the contract would permit a liability of an undefined and unlimited amount. In order to comply with R.C. 5705.41(D)(1), a contract containing an indemnification or hold harmless clause must specify a maximum dollar amount for which the school district or ESC is o

12、bligated, and that amount must be appropriated and certified as available for payment prior to the contracts execution. See Ohio Attorney General Opinion 99-049“Additional Insured Status“Additional insureds are entities that are added as insureds to the commercial general liability or automobile lia

13、bility policy by way of an endorsement or modifier.Naming an additional insured allows the additional insured to share the limits of insurance paid out for claims by the named insured“Additional Insured StatusWhy Should Your School Be An Additional Insured?This reinforces the risk transfer accomplis

14、hed through hold harmless agreements.Do this when you feel that someone elses insurance should be expected to offer you protection for a liability arising out of their work or their products and services.Examples: construction companies, suppliers who may produce a faulty batch or a bad product by f

15、aulty design or manufacture.Risk Management RecommendationsRequire contracting party to furnish an original COI before work commencesRequire your school to be named as an Additional InsuredRequire a Hold Harmless Agreement in favor of the schoolRequire insurance be placed with insurers with a curren

16、t A.M. Best rating of no less than A: VIIWaiver of Subrogation-One party, or both, may waive the right to sue the other.Waiver of SubrogationThe law allows parties negotiating a contract to apportion risk as they choose.Subrogation is the legal method for an insurer, after paying a covered claim, to

17、 pursue another party wholly or partially responsible for the loss.If the insured gives up those rights, the insurer is left without recourse.Subrogation Example Subrogation is the right to pursue someone elses claim, to “stand in the place of another person.Example: A SORSA members building burns d

18、own due to a third partys negligence. Normally, the school would sue the negligent third party for causing the fire. If SORSA pays the claim and rebuilds the building, SORSA is then subrogated to the schools claim against the negligent third party. The schools claim against the negligent third party

19、 is assigned to SORSA and SORSA may pursue the third party and their insurance company to recover the amount paid rebuilding the building.Why The Contractor Should Sign A Waiver of SubrogationThis is a way for your school to make sure there is a back-up in the event that the other party neglected to

20、 name you as an additional insured.Contractual Risk Transfer StrategiesHave competent and knowledgeable legal counsel develop indemnity clauses that conform to the applicable statutes and common law requirements.Back up indemnity/hold harmless provisions with insurance requirements:Liability Insuran

21、ceLimits of InsuranceContractual LiabilityAdditional Insured/Waiver of SubrogationKeep the requirements reasonableCertificates of Insurance(COIs)What is it? A standard form issued as evidence of a policy holders coverage and limits of liability.COIs are used to show parties in a transaction what typ

22、e of insurance is carried.Most COIs are issued on forms that have been standardized by ACORD (Agency Company Organization for Research & Development)Example of an ACORD COICertificates of InsuranceCOIs should be requested from:Suppliers (Manpower, etc.)ContractorsCOI requests should be included in:P

23、urchase ordersTemporary employment contractsConstruction contractsCertificates of InsuranceWhat to review in a COICoverage RequestedLimits requestedName and addressAdditional InsuredWaiver of SubrogationAt least 30 days notice of cancellationCOIs : ProblemsA certificate is not an insurance policyEvi

24、dence of insurance onlyRepresents the coverage and limits at the time of issuanceAt the time the Contract is executedLimits may be reduced by paid claimsA COI holder is not entitled to information regarding policy changes.Only entitled to notice of cancellationCOIs: Beware of Enforceable Disclaimer

25、LanguageThe controlling factor (whether coverage exists) for most courts is whether the COI contains disclaimer language“This Certificate is issued as a matter of information only and confers no rights upon the certificate does not amend, extend or alter the coverage afforded by the policies below.C

26、ontractual Liability ExclusionsA Common Exclusion to look out for:“This insurance does not apply toContractual Liabilityfor which the insured is obligated to pay damages by reason of the assumption of liability in a contractContractual Risk TransferExample LanguageMinimum Insurance RequirementsGener

27、al Liability Coverage.“Contractor shall maintain commercial general liability insurance with a limit of not less than $1,000,000 each occurrence.“The school district or ESC, its elected officials and employees, shall be named as additional insureds with respect to all activities under this Agreement

28、.Contractual Risk TransferExample LanguageMinimum Insurance RequirementsWorkers Compensation.“Contractor shall maintain workers compensation coverage as required by Ohio law.Never agree to provide workers comp coverage for independent contractors.Contractual Risk TransferExample LanguageMinimum Insu

29、rance RequirementsProof of Insurance.“Prior to the commencement of any work under this Agreement, Contractor shall furnish the school district or ESC with properly executed certificates of insurance for all insurance required by the Agreement. Certificates of insurance shall provide that such insurance shall not be canceled without 30 days prior written notice to the school district or ESC. Contractor will replace certificates of insurance expiring prior to completion of work under this Agreement.Indemnification/Hold HarmlessExample Cont