Fairness & Accountability in Arizona Construction

Background

The concept of “proportional liability” is based upon common-sense principles. However, by insisting upon indemnity clauses and requiring additional insured endorsements in contracts, the parties can override tort law and unfairly shift responsibility for one party’s negligence to another. In Arizona, the law governing indemnity provisions in construction contracts is different for public and private projects. For public projects, it is prohibited to require this type of indemnification as a condition of doing business. Each party bears the cost of its own negligence, and in proportion to each party’s negligence. In other words, you are responsible for what you do – no more, no less.

Objective

Fairness in Arizona’s construction industry!

In order for this to be accomplished we must change the law governing contract indemnity for private construction to mirror the law for public projects – liability should be proportional to negligence. Each party should each pay their respective share of any loss, and each share should be based on the extent of fault attributable to that party.

Things to Know

  • In private projects, Arizona law allows contractors and owners to shift their liability and risk to the subcontractors. In public projects, however, Arizona law prohibits this unfair transfer of responsibility.
  • In addition to this unfair shift in responsibility, the party who is indemnified by the subcontractor may use less care to avoid injury or loss because the indemnified party is not liable for its own actions. This carelessness may result in more accidents on the worksite that could have been avoided.
  • Ultimately, the “leakage” (such as attorney fees, increased insurance costs, etc.) that occurs as a result of indemnifying others is passed on to the consumer in the form of higher prices.
  • Arizona’s contractors are not seeking an unfair advantage. This issue is about accountability. Subcontractors simply want to ensure that each contractor, including the general contractor, will take responsibility for their own actions.

Resources

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