Indemnity Agreements Now Void in Professional Services Contracts


On May 16, 2014, Governor Dayton approved a statute that voids indemnity agreements in design professional service contracts when the contract requires the design professional to indemnify the actions of others who are not the design professional servicer, their employees, or others for whom they are liable. This bill has been in the works for approximately five years. Previously, it was common in construction contracts for the contractor to require a design professional to indemnify contractors for the contractor’s errors. According to Representative Melissa Hortman (DFL), this bill is aimed to prevent that practice.

Who Falls Under the Category of “Design Professionals?”

Anyone who is licensed under Minn. Stat § 326.02, which includes architects, professional engineers, land surveyors, landscape architects, professional geoscientists and certified interior designers.

Will an Indemnity Provision Void the Whole Contract or Just the Portion regarding Indemnity?

Under the statute as written states that only “a provision” contained in or executed in connection with a design professional services contract is void, not the whole contract.

Does this New Law Apply to all Contracts?

No. It applies to contracts that are related to the maintenance or improvement of real property, highways, roads, or bridges in Minnesota.

What if the Contract States that the Contract is Subject to Another State’s Laws or Jurisdiction?

The law requires that these contracts be subject to the laws of Minnesota and any provisions in the contract applying a different state’s law or providing other state jurisdiction over these contracts is void.

What if a Design Professional has Insurance to Cover Indemnification?

This new law does not apply to the extent that the obligation to indemnify, to hold harmless, or to defend an indemnitee is able to be covered by insurance.

Are There any other Agreements that this Law does not Apply to?

It does not apply to certain settlement agreements or agreements with insurance and bonding companies under Minnesota Statutes §§ 337.03 and 337.04.

When is this New Law Effective?

It is effective August 1, 2014 and applies to contracts or agreements entered into on or after that date.