Indemnity Agreement (Non-Aviation)

[Palmpilot]

What is the risk to my assets in agreeing to the following:

5. Indemnity agreement: Contractor agrees to indemnify and hold the Company, its directors, officers, agents and volunteers harmless from and against any and all obligations, liabilities, actions, claims, demands losses expenses or damages (including reasonable attorney fees and court costs) caused by or arising out of any act whether negligent or intentional or omission by the contractor in the performance or breach of Contractors obligation hereunder.​

It's part of a contract that I'm being asked to sign to work as an independent contractor in an orchestra performance next month. I don't know whether my homeowner's insurance would cover my liability.

Is this a show stopper, or am I worrying too much?

The contract also specifies that disputes will be settled by arbitration, with the costs to be borne equally by the parties. I'm concerned about the lack of a dollar limit on this obligation too. Does anyone here know how much arbitration usually costs?

There's not enough money involved to justify hiring an attorney, but I thought I would see if anyone here has some insights before I turn down the job.

 

[MAKG1]

That's pretty standard in the theater.

And don't use "show stopper" like that in that context. A show stopper is a very good thing in the theater. We strive for that. It means a production that is so good that the audience won't stop applauding, and we have to wait for it. The engineer meaning is completely opposite.

Basically, they don't want you suing them if one of the actors trips off the stage and smushes your instrument. It's happened. And I've seen a lot of near misses. The worst was when the tech crew almost pushed the Paroo house into the orchestra during a scene change in Act 2 of Music Man.

You should have seen the disclaimer for all the Darling kids in the Peter Pan production I did last spring (and that one did have a showstopper on closing night, when Peter taunted Captain Hook as a "beautiful lady"). That production did have an instrument fatality, but it was the bass player's fault for balancing it on the edge of the stage.

Is this your first semipro gig?

That seems to be about their liability, not yours. It says your instrument (and your car, etc.) are your responsibility to replace or repair is something bad happens. Of course, I'm not a lawyer.

Which gig is that? SBMT?

 

[Jeff Oslick]

5. Indemnity agreement: Contractor agrees to indemnify and hold the Company, its directors, officers, agents and volunteers harmless from and against any and all obligations, liabilities, actions, claims, demands losses expenses or damages (including reasonable attorney fees and court costs) caused by or arising out of any act whether negligent or intentional or omission by the contractor in the performance or breach of Contractors obligation hereunder.​

Not an attorney, but I deal with contracts frequently. We have contractors and clients try to pass this phrasing by us occasionally. The problem is the "or intentional or omission" can be too broad. Omission usually isn't a problem, because our professional insurance would cover that. The "intentional" part is the most concerning...you may have an "intentional" act that wasn't negligent but ended badly. Up to you whether you think that risk is significant in your case.

My favorite one was the client that tried to get us to indemnify them against *their own* negligent acts. That didn't fly far at all.

If you have a question about what your insurance covers, don't assume, ask, and get it in writing.

 

[Geico266]

Any of those boiler plate liability clauses are pretty worthless is court. Signing it before an act of gross negligence just doesn't stand up in court. If you are grossly negligent no clause is going to protect you or them.

Sign it and move on.

 

[PPC1052]

I cannot tell you what that contract means, because 1) I cannot see the whole document which might change the meaning or context, 2) I don't know what state you're in and there is a 49 out of 50 chance that I am not licensed to practice in your state.

Some things to think about: this may mean that you would have to indemnify them for claims made against them for any claims arising from your own actions. So, if you back over someone in the parking lot (an action, maybe negligent, maybe intentional 'cause you hated the guy you ran over), and they sue the company, you gotta pay for their defense, and any damages. If you forget to set your parking brake (an omission as opposed to an "action") and it runs over someone, you gotta pay. If your string breaks due to no fault of your own and the tension causes it to lash out and amputate an audience member, and they sue the company, you might have to pay. You play too loudly, and blow out an ear drum of an audience member (or maybe just the contract musician sitting next to you), and they sue the company, you might have to pay. If you play your instrument too hard because the conductor tells you to, and you break your arm and you sue the company, you probably have to pay them for your damages as well as their defense costs. (So what's the point of suing them, right?)

It does seem to say that your responsibility to pay is limited to only your actions or omissions. So, if their stage hand drops something on the audience, that seems to fall outside of what you have to pay for. Many states will require that if the indemnity is to be for the indemnitee's own negligence, it's got to expressly so state. I don't see that language. So you may be safe on that front. Many states do not even allow parties to seek indemnity from others for their own negligence in most settings. I don't know what the law is in your state.

 

[PPC1052]

That seems to be about their liability, not yours.

Its about their liability arising from your actions. This doesn't say that you can't sue them. It says you have to pay if they get sued or someone makes a claim.

 

[PPC1052]

The contract also specifies that disputes will be settled by arbitration, with the costs to be borne equally by the parties. I'm concerned about the lack of a dollar limit on this obligation too. Does anyone here know how much arbitration usually costs?

Depends on who you use and the complexity of the issues. AAA, with three arbiters is quite pricy. Think $50,000 to $100,000 just for the arbiters, and not any attorneys just for a typical construction case. Often it will just be one or three local attorneys selected, each billing something approximating their typical hourly rate. But this arbitration clause only applies to disputes between you and the company. It wouldn't apply to third parties that sue. They would not be bound because they are not a party to this contract and they can file in regular court.

 

[Palmpilot]

That's pretty standard in the theater...Is this your first semipro gig?

No. I've been involved in professional music making (on a part time basis) for forty years, but I don't recall anyone asking me to indemnify them for anything.

This kind of thing really makes me appreciate union gigs.

That seems to be about their liability, not yours. It says your instrument (and your car, etc.) are your responsibility to replace or repair is something bad happens. Of course, I'm not a lawyer.

Indemnification is a promise to pay, according to Webster. And notice that it says I indemnify them against claims arising from acts by the Contractor (me), not acts by the Company (them).

in·dem·ni·fy verb \in-ˈdem-nə-ˌfī\

: to protect (someone) by promising to pay for the cost of possible future damage, loss, or injury

: to give (someone) money or another kind of payment for some damage, loss, or injury​

 

[Palmpilot]

Depends on who you use and the complexity of the issues. AAA, with three arbiters is quite pricy. Think $50,000 to $100,000 just for the arbiters, and not any attorneys just for a typical construction case. Often it will just be one or three local attorneys selected, each billing something approximating their typical hourly rate. But this arbitration clause only applies to disputes between you and the company. It wouldn't apply to third parties that sue. They would not be bound because they are not a party to this contract and they can file in regular court.

Thanks for your responses. I suppose the main protection against excessive arbitration costs is that they would have to pay half, and that the arbitrator has to be agreed upon by the parties.

The state is California. My main concern is whether signing this would be taking on significant liability that I would not otherwise be subject to.

 

[MAKG1]

No. I've been involved in professional music making (on a part time basis) for forty years, but I don't recall anyone asking me to indemnify them for anything.

This kind of thing really makes me appreciate union gigs.

You're right; I missed a few key words in there.

I've had to agree not to sue rather frequently, but not to assume that level of responsibility. I'd expect that would make me cost quite a lot more. My guess is they have no budget, and therefore no insurance.

Not that there is much an orchestra member can do to the general public. I suppose you could hit a patron with your car….but then you would obviously be responsible and have appropriate insurance.

Which organization is this? It's not unusual to spring contracts on the first day of rehearsal -- after everyone has agreed to do the gig. I'd like to avoid an uninsured organization. There is lots of potential for injury in the theater.

 

[TedR3]

My main concern is whether signing this would be taking on significant liability that I would not otherwise be subject to.

Not legal advice:

Yes, you (most likely) are.

You are agreeing to pay the attorneys' fees incurred by the Orchestra defending itself from a third party claim arising from your act or omission.

Strike the indemnification and see if the Orchestra balks at signing.

 

[Jeff Oslick]

Ty main concern is whether signing this would be taking on significant liability that I would not otherwise be subject to.

The short answer is yes, but it needs to be viewed in the context of the risk.

If you fall off the stage and hurt an audience member, and they sue the venue, they can come after you for your "omission" to not take precautions to not fall off the stage.

p.s. I hate lawyers. Never have so few done so much to ruin the lives of so many. With the possible exception of invoking a Godwin's Law reference.

 

[Kelvin]

Just tell the no...or...I am glad to gig but I'll indemnify you if you indemnify me...

 

[SCCutler]

Add, at the front, the following: "To the extent of Contractor's negligence or fault,"

 

[asechrest]

In regard to your homeowner insurance, I'd take a good look at your Section II Liability exclusions. Some of them often involve rendering of professional services, engaging in a business (whether or not you own the business), and contractual liability.

Here is some exclusionary language from a policy form in my state of FL. Do not consider this to apply to you. Please consult your policy:


1. Coverage E – Personal Liability and Coverage
F – Medical Payments to Others do not apply to
"bodily injury" or "property damage":

b. Arising out of or in connection with a
"business" engaged in by an "insured." This
exclusion applies but is not limited to an act or
omission, regardless of its nature or
circumstance, involving a service or duty
rendered, promised, owed, or implied to be
provided because of the nature of the
"business";

d. Arising out of the rendering of or failure to
render professional services;

2. Coverage E – Personal Liability, does not apply
to:
a. Liability:
(1) For any loss assessment charged against
you as a member of an association,
corporation or community of property
owners;
(2) Under any contract or agreement.
However, this exclusion does not apply to
written contracts:
(a) That directly relate to the ownership,
maintenance or use of an "insured
location"; or
(b) Where the liability of others is assumed
by the "insured" prior to an
"occurrence";
unless excluded in (1) above or elsewhere
in this policy;

 

[Palmpilot]

In regard to your homeowner insurance, I'd take a good look at your Section II Liability exclusions. Some of them often involve rendering of professional services, engaging in a business (whether or not you own the business), and contractual liability.

Here is some exclusionary language from a policy form in my state of FL. Do not consider this to apply to you. Please consult your policy:


1. Coverage E – Personal Liability and Coverage
F – Medical Payments to Others do not apply to
"bodily injury" or "property damage":

Thanks for the point out. My policy does exclude liability coverage associated with any professional services or business activity I engage in. And it specifically excludes any liability that I assume arising out of any contract or agreement.

This makes it clear that I have no liability coverage for any work that I might do as an independent contractor, whether there's an indemnification agreement or not. I don't even know where to get such coverage, and considering how seldom I do that kind of thing, the cost would probably exceed what little income might be involved.

 

[MAKG1]

I don't even know where to get such coverage, and considering how seldom I do that kind of thing, the cost would probably exceed what little income might be involved.

Not necessarily. SBMT has everyone involved with a production become a "member" for insurance purposes. It costs $5/year. But, they are a 501(c)(3) (though almost all the local arts organizations are as well).

 

[Palmpilot]

Sounds like they're a much better outfit to work with than the one I'm dealing with.

I'm starting to reconsider whether to accept offers to play for money in the future, considering the insurance issue.

 

[asechrest]

Thanks for the point out. My policy does exclude liability coverage associated with any professional services or business activity I engage in. And it specifically excludes any liability that I assume arising out of any contract or agreement.

This makes it clear that I have no liability coverage for any work that I might do as an independent contractor, whether there's an indemnification agreement or not. I don't even know where to get such coverage, and considering how seldom I do that kind of thing, the cost would probably exceed what little income might be involved.

What is interesting is that, if you look closely at the contractual liability exclusion I posted, it appears to offer coverage if "the liability of others is assumed by the "insured" prior to an*"occurrence"". I'm no lawyer but that would seem to be the case here. But of course there are the other exclusions to contend with.

 

[PPC1052]

Sounds like they're a much better outfit to work with than the one I'm dealing with.

I'm starting to reconsider whether to accept offers to play for money in the future, considering the insurance issue.

And now you know why the businessmen always hate the lawyers.

 

[Palmpilot]

And now you know why the businessmen always hate the lawyers.

That doesn't sound very smart. Who are they going to turn to for help if someone tries to screw them over? I'm especially unsympathetic to the "hate lawyers" meme after one or two of them have helped me understand the issues in this thread.

 

[NoHeat]

To indemnify is a big deal. It means that you are the insurance company for the other party (the Company, in your case). I would be very reluctant to sign any such indemnity agreement.

It's completely different from agreeing that you won't sue the Company. That exposes you to much less risk than an indemnity.

This situation is actually arising in aviation, with regard to Avidyne's service agreements for repairing their avionics. Avidyne now offers you what looks like a better price for the service agreement if agree to indemnify Avidyne. The problem with doing this is that if you crash your plane and a passenger dies, the estate for that passenger might then sue Avidyne for millions of dollars. And that has happened to some avionics companies. If you signed that indemnity agreement with Avidyne, your estate is now Avidyne's insurance company, and Avidyne will force your estate to pay for their lawyer and any settlement. Your surviving family could be left penniless. So I would never sign Avidyne's indemnity agreement - it would be much better to pay more for a service agreement without that clause, or to have no service agreement at all.

The orchestra concert sounds much less likely to kill somebody than a plane, but I still wouldn't want to sign a contract that makes me the insurance company for the other party.

edit:

here's the Avidyne indemnity agreement that I mentioned:

www.avidyne.com/SUPPORT/legal-rights.asp

excerpt:

I WILL INDEMNIFY AND HOLD HARMLESS AVIDYNE CORPORATION AND THE RELEASED PARTIES FROM AND AGAINST ALL CLAIMS REFERRED TO IN THE PRECEDING PARAGRAPHS, AND PAY THE COSTS OF DEFENDING SUCH CLAIMS (INCLUDING ATTORNEY’S FEES)

 

[Palmpilot]

Thanks for the additional info. I informed them a little while ago that I am unwilling to sign the contract unless the paragraph I quoted is removed. I also told them that if they prefer to hire someone else, that's OK. (I don't really need the work.)

 

[PPC1052]

That doesn't sound very smart. Who are they going to turn to for help if someone tries to screw them over? I'm especially unsympathetic to the "hate lawyers" meme after one or two of them have helped me understand the issues in this thread.

Take a look at who said that.


The phenomenon I reference is that the business guys are trying to get the deal done so they can make money, meanwhile the lawyers are trying to write all kinds of exculpatory clauses in, and risk shifting provisions for all kinds of risks that could happen, and might suck if they did, but are highly unlikely. Then the other side's lawyers see it and tell their business folks not to accept the "tweaks" added to the language. So then the business proposition that makes sense for both parties takes for ever to complete, or maybe even gets scuttled because the lawyers are fighting about clauses and commas. It drives the business guys crazy. As someone in the target class, I understand why. (Also, note that I am not saying they should. I just say that I understand.)

And this is what is going on in your case. You just want to play a gig, but now you might not because of some risk shifting language in the contract.

 

[PPC1052]

here's the Avidyne indemnity agreement that I mentioned:

www.avidyne.com/SUPPORT/legal-rights.asp

excerpt:

I WILL INDEMNIFY AND HOLD HARMLESS AVIDYNE CORPORATION AND THE RELEASED PARTIES FROM AND AGAINST ALL CLAIMS REFERRED TO IN THE PRECEDING PARAGRAPHS, AND PAY THE COSTS OF DEFENDING SUCH CLAIMS (INCLUDING ATTORNEY’S FEES)

Wow. I have never seen a consumer product where the manufacturer was seeking indemnity from the owner. Interesting. As I read the contract, there seems to be some ambiguity as to whether the indemnity provision only applies to potential claims by the party(ies) signing the agreement as opposed to claims by third parties. I can see arguments either way on that one, and I haven't really spent the time and mental energy parsing the language out. And, as my usual disclaimer, I am not necessarily licensed to practice in your state, and I am certainly not licensed in Delaware, the state that ostensibly the parties agree should apply to the interpretation of the agreement.

 

[Palmpilot]

Take a look at who said that.

Oops!

 

[Jeff Oslick]

You should fine out how much the insurance costs - I bet most any commercial insurance broker can easily find this type of general business risk insurance. Given the (very) low risk associated with your profession, I suspect the insurance is not very expensive - possibly as as low as a couple/few hundred a year. That may not be "affordable" if you play very few gigs that require it. As with most policies, the real hidden value is the legal defense coverage.

 

[jesse]

IME people assume too often that changing a contract isn't an option. I have yet to ever run into a scenario where I saw writing in a contract that I didn't like that the other party wasn't willing to change. YMMV.

 

[Palmpilot]

IME people assume too often that changing a contract isn't an option. I have yet to ever run into a scenario where I saw writing in a contract that I didn't like that the other party wasn't willing to change. YMMV.

So far, the company has offered to change it to only cover intentional acts or gross negligence, but not to remove indemnification altogether.

 

[Palmpilot]

You should fine out how much the insurance costs - I bet most any commercial insurance broker can easily find this type of general business risk insurance. Given the (very) low risk associated with your profession, I suspect the insurance is not very expensive - possibly as as low as a couple/few hundred a year. That may not be "affordable" if you play very few gigs that require it. As with most policies, the real hidden value is the legal defense coverage.

The current job pays a total of $300, and may well end up being my only paying gig this year.

 

[SkyHog]

IME people assume too often that changing a contract isn't an option. I have yet to ever run into a scenario where I saw writing in a contract that I didn't like that the other party wasn't willing to change. YMMV.

Its a big part of what I do for a living.

Interestingly, I am seeing more and more vendors (usually cloud start ups) try to claim that their boilerplate language is rigid and unchangeable. Threaten to pull a few million dollars away from them and suddenly they learn to tell their lawyers to back down a bit.

I have seen in personal life some cases where someone was unwilling to modify terms in a contract (for example, buy a car from CarMax sometime), but in those cases you just don't do business if you don't agree. I see too many people say "well, I guess I gotta sign..."

Bad move usually.

 

[Henning]

In regard to your homeowner insurance, I'd take a good look at your Section II Liability exclusions. Some of them often involve rendering of professional services, engaging in a business (whether or not you own the business), and contractual liability.

Here is some exclusionary language from a policy form in my state of FL. Do not consider this to apply to you. Please consult your policy:


1. Coverage E – Personal Liability and Coverage
F – Medical Payments to Others do not apply to
"bodily injury" or "property damage":

The language in his state is likely the exact duplicate, most states are ISO and carry identical homeowners products.

If you are being paid for this gig, then your homeowners liability will not cover.

How much are you being paid for this gig? Is it worth the actual liability loss risk? What are the chances you will injure someone or damage their property? What is the value of the potential loss? (I don't know the level of instruments involved, the greatest risk I see is breaking someone's quarter million dollar fine instrument.)

It would have to be worth a lot to me in some fashion to sign off on that contract.

 

[Alexb2000]

Add, at the front, the following: "To the extent of Contractor's negligence or fault,"

 

[MAKG1]

The current job pays a total of $300, and may well end up being my only paying gig this year.

I don't think folks here appreciate that that's typical, and it's why musicians almost always have day jobs. Even those who play full time have to supplement with private lessons and other teaching.

We always joke that the pay is for gas money, but it really doesn't even cover that.

A musician is a guy who puts a $5000 instrument in a $500 car to go to a $50 gig.

 

[asechrest]

The language in his state is likely the exact duplicate, most states are ISO and carry identical homeowners products.

If you are being paid for this gig, then your homeowners liability will not cover.

.

Not necessarily. Many companies file a modified ISO or even a custom policy form. There are also at least three edition dates of the ISO HO3 policy form in use by companies. The excerpt I posted is from Florida's Citizens Property Insurance policy form. Hence the caveat to check his policy, which is always the best advice. But it is quite likely that the language is similar or the same.

 

[Palmpilot]

I don't think folks here appreciate that that's typical, and it's why musicians almost always have day jobs. Even those who play full time have to supplement with private lessons and other teaching.

We always joke that the pay is for gas money, but it really doesn't even cover that.

A musician is a guy who puts a $5000 instrument in a $500 car to go to a $50 gig.

Reminds me of a riddle I heard:

What's a musician without a "significant other"?
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Homeless!

 

[Palmpilot]

Well, after a truly annoying series of emails, I heard from the other bassoonist that they have decided to hire someone else, which is what I expected would happen.

 

[MAKG1]

Well that sucks.

Let's hope for their sake nothing ever happens, or they won't be able to find slave wage professionals anywhere.

Nobody does this stuff for the money. You gotta treat the musicians/actors/crew decently or they go to the 500 other outfits in the region.

 

[Palmpilot]

My guess is that most of the musicians they hired either didn't read what they signed, or don't know what "indemnify" means.

It's not the first time I've seen a one-sided contract on a non-union job, but it is the first time I've seen an indemnification clause (which was the deal breaker for me). I won't be surprised if it becomes a trend. (They did mention that their contract was copied from another musical organization in the area.)

When they gave up trying to convince me to sign, there were only three weeks left before the first rehearsal. In their last email, they commented "It's unfortunate for us." Well cry me a river. Maybe they shouldn't have waited four weeks between offering me the job and informing me of the contract terms!

 

[Henning]

So what kind of groupies do Bassoonists get?