HCS HB 336 -- CONSTRUCTION CONTRACTS (Green)

This substitute declares indemnity or "hold harmless" clauses in
construction contracts void as against public policy.  A "hold
harmless" clause is one where a party contracts away its
possible liabilities for future negligence.  Contracts already
in existence are not affected.  The bill does not apply to
insurance contracts or contractual provisions requiring a party
to name another party as an insured.  In addition, the bill does
not affect provisions that place a limitation on tort liability
between the contracting parties, otherwise known as a
"limitation of liability clause."

FISCAL NOTE:  Cost to State Road Fund is Unknown for FY 1998, FY
1999, and FY 2000.

HCS HB 336 -- CONSTRUCTION CONTRACTS

SPONSOR:  May (Green)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Judiciary
by a vote of 13 to 2.

This substitute declares indemnity or "hold harmless" clauses in
construction contracts void as against public policy.  A "hold
harmless" clause is one where a party contracts away its
possible liabilities for future negligence.  Contracts already
in existence are not affected.  The bill does not apply to
insurance contracts or contractual provisions requiring a party
to name another party as an insured.  In addition, the bill does
not affect provisions that place a limitation on tort liability
between the contracting parties, otherwise known as a
"limitation of liability clause."

FISCAL NOTE:  Cost to State Road Fund is Unknown for FY 1998, FY
1999, and FY 2000.

PROPONENTS:  Supporters say that the simple economics of supply
and demand in the construction industry forces contractors and
subcontractors to assume all the liability at a construction
project, no matter who is at fault in an accident.  Because the
competition for work is so great, contractors are forced to
accept these contract terms, and simply hope that nothing goes
wrong.  If there was an accident causing substantial liability,
many contractors would be forced into bankruptcy.  These clauses
are in the fine print of every purchase order.  Contractors who
balk at the contract provision simply don't get any work.
Entities in other industries, such as common carriers, are
prohibited from using such contracts.  The construction industry
needs the same protection.

Testifying for the bill were Representative Green; American
Subcontractors Association; St. Louis Area Contractors
Association; Associated General Contractors of St. Louis;
Associated General Contractors of Missouri; American Institute
of Architects; Builders Association of Missouri; and Missouri
Association of Plumbing, Heating and Cooling Contractors.

OPPONENTS:  Those who oppose the bill say that this legislation
takes away an entity's ability to contract with another
regarding liability.  The state should not interfere with a
person's ability to contract.

Testifying against the bill were Associated Industries of
Missouri; and City of Springfield.

Richard Smreker, Research Analyst

HB 336 -- Construction Contracts

Sponsor:  Green

This bill declares indemnity or "hold harmless" clauses in
construction contracts void as against public policy.  A "hold
harmless" clause is one where a party contracts away its
possible liabilities for future negligence.  Contracts already
in existence are exempt.  The bill does not apply to insurance
contracts or contractual provisions requiring a party to name
another party as an insured.