Defect liability
Construction contracts allocate risk through indemnity clauses, and California limits how far that allocation can go. Some clauses are void as against public policy no matter how clearly they were drafted or how willingly they were signed. The limits are not uniform — they depend on who is being indemnified, whether the project is public or private, and when the contract was entered into. This guide, reviewed by Jayson R. Elliott, covers what the statutes void and what they leave alone.
Civil Code section 2782(a) is the foundation. Subject to exceptions in sections 2782.1, 2782.2, 2782.5 and 2782.6, provisions contained in, collateral to, or affecting any construction contract that purport to indemnify the promisee against liability for damages for death or bodily injury, injury to property, or any other loss, damage or expense arising from the sole negligence or willful misconduct of the promisee — or of the promisee’s agents, servants, or independent contractors directly responsible to the promisee — or for defects in design furnished by those persons, are against public policy and are void and unenforceable.
Three things are worth pulling out of that. The reach is broad: “contained in, collateral to, or affecting” catches side agreements and not just the indemnity paragraph itself. Design defects furnished by the promisee are covered alongside negligence. And the consequence is voidness as a matter of public policy, which is not something the parties can negotiate around.
Section 2782(a) also contains a carve-out that matters: the section does not affect the validity of any insurance contract, workers’ compensation, or agreement issued by an admitted insurer as defined by the Insurance Code. Indemnity and insurance are treated differently, which is the point developed below.
Section 2782 does not stop at sole negligence. For construction contracts with public agencies, indemnity by subcontractors, suppliers and general contractors is void as against the agency’s active negligence. For private owner construction contracts, indemnity by a subcontractor, supplier or general contractor is unenforceable against the owner’s active negligence, subject to an exception where the owner is acting as the contractor.
The shift from “sole” to “active” is a meaningful widening. A promisee whose negligence contributed alongside others is not protected by the sole-negligence standard, but may well fall within active negligence. Contractors dealing with owners and agencies get the broader protection.
Section 2782.05, enacted as part of Senate Bill 474, extended similar protection down the chain. For construction contracts and amendments entered into on or after January 1, 2013, provisions that purport to insure or indemnify — including the cost to defend — a general contractor, construction manager, or other subcontractor, by a subcontractor, are void and unenforceable to the extent the claims arise out of, pertain to, or relate to the active negligence or willful misconduct of that general contractor, construction manager or other subcontractor, or defects in design furnished by those persons, or to the extent the claims do not arise out of the scope of work of the subcontractor.
Two features deserve emphasis. The phrase “including the cost to defend” reaches the duty to defend, not just the ultimate indemnity — historically the more expensive obligation. And the final clause reaches claims outside the subcontractor’s scope of work, which is a scope-based protection independent of anyone’s negligence.
Section 2782.05 carries a substantial list of exceptions. They are commonly summarised as including residential construction, direct contracts with public agencies or with private owners governed by section 2782 instead, wrap-up insurance programs, claims for breach of contract or warranty, obligations to procure insurance covering the subcontractor’s own acts and omissions, surety indemnities, workers’ compensation, obligations to procure owners’ and contractors’ protective and property insurance, contracts with design professionals, and bonding agreements.
That list is long enough that the exceptions do real work. A clause that looks void under the general rule may sit inside one of them, which is why this is a provision to review against a specific contract rather than to apply from a summary.
The statutes turn on these two terms and define neither. Sections 2782 and 2782.05 contain no statutory definition of active negligence, and commentators have noted that courts are left to work from existing case law on the active-passive distinction.
The practical consequence for a contractor is that whether a particular clause is enforceable can turn on a characterisation that will be contested after the loss, not settled at signing. That argues for drafting that does not depend on the distinction, and for not assuming a broadly worded indemnity will deliver what it appears to promise.
Section 2782(a) expressly preserves the validity of insurance contracts, workers’ compensation, and agreements issued by an admitted insurer. That separation is the reason additional-insured requirements are so prevalent in construction contracts: an obligation to procure insurance is not the same instrument as an indemnity obligation, and it is not voided on the same terms.
Section 2782.05 does reach provisions that purport to “insure or indemnify,” so the separation is not absolute, and commentators have observed that the statute’s application to additional-insured requirements is less clear than its application to indemnity clauses. Treat an additional-insured requirement as a question to be reviewed on its own terms rather than as a reliable route around the indemnity limits.
Before you ask
Not for their sole negligence. Civil Code section 2782(a) makes provisions in, collateral to, or affecting a construction contract that indemnify the promisee against liability arising from the promisee’s sole negligence or willful misconduct — or for defects in design furnished by them — void and unenforceable as against public policy, subject to exceptions in sections 2782.1, 2782.2, 2782.5 and 2782.6.
They set different thresholds and neither is defined in the statutes. Civil Code section 2782(a) voids indemnity for the promisee’s sole negligence generally, while indemnity for a public agency’s or private owner’s active negligence is separately void or unenforceable under section 2782, and section 2782.05 uses active negligence for general contractors, construction managers and other subcontractors.
It applies to construction contracts and amendments entered into on or after January 1, 2013, so contract vintage is the threshold question. It also carries a long list of exceptions, commonly summarised as including residential construction, wrap-up insurance programs, breach of contract or warranty claims, surety indemnities, workers’ compensation, contracts with design professionals, and bonding agreements.
Section 2782.05 addresses it expressly: it reaches provisions that purport to insure or indemnify, “including the cost to defend,” a general contractor, construction manager or other subcontractor. That matters because the defense obligation is frequently the larger exposure of the two.
Civil Code section 2782.05 voids such provisions to the extent the claims do not arise out of the scope of work of the subcontractor, for contracts entered on or after January 1, 2013. That is a scope-based protection that operates independently of whether anyone was negligent.
Not on the same terms. Civil Code section 2782(a) expressly preserves the validity of insurance contracts, workers’ compensation, and agreements issued by an admitted insurer. Section 2782.05 does reach provisions that purport to “insure or indemnify,” and commentators have noted its application to additional-insured requirements is less clear than to indemnity clauses — so those provisions warrant separate review.
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Inline first mention: indemnity, promisee, sole negligence, active negligence, duty to defend, additional insured, wrap-up
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