SF 754

1st Engrossment - 93rd Legislature (2023 - 2024) Posted on 06/20/2023 02:05pm

A bill for an act
relating to contracts; modifying and clarifying requirements relating to building
and construction contracts; amending Minnesota Statutes 2022, sections 15.71, by
adding subdivisions; 15.72, by adding a subdivision; 337.01, subdivision 3; 337.05,
subdivision 1.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2022, section 15.71, is amended by adding a subdivision
to read:

new text begin Subd. 1a. new text end

new text begin Indemnification agreement. new text end

new text begin "Indemnification agreement" means an agreement
by the promisor to indemnify, defend, or hold harmless the promisee against liability or
claims of liability for damages arising out of bodily injury to persons or out of physical
damage to tangible or real property.
new text end

Sec. 2.

Minnesota Statutes 2022, section 15.71, is amended by adding a subdivision to
read:

new text begin Subd. 1b. new text end

new text begin Promisee. new text end

new text begin "Promisee" includes that party's independent contractors, agents,
employees, or indemnitees.
new text end

Sec. 3.

Minnesota Statutes 2022, section 15.72, is amended by adding a subdivision to
read:

new text begin Subd. 3. new text end

new text begin Unenforceability of certain agreements. new text end

new text begin (a) An indemnification agreement
contained in, or executed in connection with, a contract for a public improvement is
unenforceable except to the extent that:
new text end

new text begin (1) the underlying injury or damage is attributable to the negligent or otherwise wrongful
act or omission, including breach of a specific contractual duty, of the promisor or the
promisor's independent contractors, agents, employees, or delegatees; or
new text end

new text begin (2) an owner, a responsible party, or a governmental entity agrees to indemnify a
contractor directly or through another contractor with respect to strict liability under
environmental laws.
new text end

new text begin (b) A provision in a public building or construction contract that requires a party to
provide insurance coverage to one or more other parties, including third parties, for the
negligence or intentional acts or omissions of any of those other parties, including third
parties, is against public policy and is void and unenforceable.
new text end

new text begin (c) Paragraph (b) does not affect the validity of a provision that requires a party to provide
or obtain workers' compensation insurance, construction performance or payment bonds,
builder's risk policies, owner or contractor-controlled insurance programs or policies, or
project-specific insurance for claims arising out of the promisor's negligent acts or omissions
or the negligent acts or omissions of the promisor's, independent contractors, agents,
employees, or delegatees.
new text end

new text begin (d) Paragraph (b) does not affect the validity of a provision that requires the promisor
to provide or obtain insurance coverage for the promisee's vicarious liability, or liability
imposed by warranty, arising out of the acts or omissions of the promisor.
new text end

new text begin (e) Paragraph (b) does not apply to building and construction contracts for work within
50 feet of public or private railroads, or railroads regulated by the Federal Railroad
Administration.
new text end

Sec. 4.

Minnesota Statutes 2022, section 337.01, subdivision 3, is amended to read:

Subd. 3.

Indemnification agreement.

"Indemnification agreement" means an agreement
by the promisor to indemnify new text begin , defend, new text end or hold harmless the promisee against liability or
claims of liability for damages arising out of bodily injury to persons or out of physical
damage to tangible or real property.

Sec. 5.

Minnesota Statutes 2022, section 337.05, subdivision 1, is amended to read:

Subdivision 1.

Agreements valid.

(a) Except as otherwise provided in paragraph (b),
sections 337.01 to 337.05 do not affect the validity of agreements whereby a promisor agrees
to provide specific insurance coverage for the benefit of others.

(b) A provision that requires a party to provide insurance coverage to one or more other
parties, including third parties, for the negligence or intentional acts or omissions of any of
those other parties, including third parties, is against public policy and is void and
unenforceable.

(c) Paragraph (b) does not affect the validity of a provision that requires a party to provide
or obtain workers' compensation insurance, construction performance or payment bonds,
deleted text begin or project-specific insurance, including, without limitation, builder's risk policies or owner
or contractor-controlled insurance programs or policies deleted text end new text begin builder's risk policies, owner or
contractor-controlled insurance programs or policies, or project-specific insurance for claims
arising out of the promisor's negligent acts or omissions or the negligent acts or omissions
of the promisor's, independent contractors, agents, employees, or delegatees new text end .

(d) Paragraph (b) does not affect the validity of a provision that requires the promisor
to provide or obtain insurance coverage for the promisee's vicarious liability, or liability
imposed by warranty, arising out of the acts or omissions of the promisor.

(e) Paragraph (b) does not apply to building and construction contracts for work within
50 feet of public or private railroads, or railroads regulated by the Federal Railroad
Administration.

Sec. 6. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 5 are effective the day following final enactment and apply to agreements
entered into on or after that date.
new text end