INDEMNITY: Who is Picking up the Tab?
ROCKY MOUNTAIN WATER JULY 2019 | 27
By Serena Hendon
VOLUNTEERING TO PICK UP THE TAB AT A GROUP
get-together can seem like a good idea at the time.
Then the much-more-than-expected bill comes, and
you mutter something about never doing that again. But, if
you’re agreeing to any type of contract or waiver, whether
personal or professional, you might be surprised at how
often you are actually agreeing to do just that.
In most contracts, whether it be for construction work,
professional service, or a waiver so your child can attend a
birthday party at the latest children’s entertainment center,
one term is almost guaranteed to be included: indemnity. To
indemnify another party means that you become an insurer
for another person or entity. It also means that, just like the
tab scenario, you could find yourself responsible for quite a
bit of money.
Let’s say Y Company is the general contractor building a
wastewater treatment facility. X Company is the surveyor for
the new main sewer interceptor conveying sewage into the
plant and Z Company is the pipeline subcontractor.
Z Company starts installing the interceptor line according to
the stakes set up by X Company. But, as Z Company installs
the line according to the stakes and the plans, the line starts
coming above ground. After several meetings with X, Y,
and Z companies, it is determined that X Company made a
mistake by not closing the survey loop. (Yes, old school.) The
fix is for Z Company to remove a certain amount of the pipe
and re-install with the corrected information, which costs Z
Company time and materials.