Transcript Slide 1

RISK MANAGEMENT
EDUCATIONAL SESSION:
CONTRACT CHECKLISTS
PRESENTERS
• Robert Moore, Chief Legal Officer, NBIS
• Dave Wittwer, CIC, CRM, The Buckner Company
• Billy Smith, EVP, Claims and Risk Management, NBIS
• Jeff Haynes, USI EVP National Construction Practice Leader
• Randy Proos, USI VP National Construction Accounts
TRANSPORTATION CONTRACTS
PART I: TRANSPORTATION CONTRACTS
THROUGH BILL OF LADING
• Carriage of Goods by Sea Act (COGSA)
– Should be incorporated by reference into every through bill of lading
(bill of lading for the foreign transport of goods to or from the US)
– Contains a list of causes of loss for which the carrier or vessel is not
liable as long as the carrier exercised reasonable steps to make the
ship seaworthy and to handle/stow goods responsibly
– COGSA also limits liability to $500/package or customary freight unit,
unless another amount is specifically mentioned in the bill of lading –
that amount however can never be greater than the actual loss
incurred
THROUGH BILL OF LADING
• Defenses under COGSA
– Pursuant to 46 U.S.C.A. 30706, a carrier and the vessel are not liable
for loss or damage arising from:
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Dangers of the sea or other navigable waters
Acts of God
Public enemies
Seizure under legal process
Inherent defect, quality, or vice of the goods
Insufficiency of package
Act or omission of the shipper or owner of the goods or their agent, or
Saving or attempting to save life or property at sea, including a deviation
in rendering such a service
BILLS OF LADING
 Contractual Provisions
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“received subject to individually determined rates” language
Section 7 language
Declaration of Value
No consequential, punitive, or special damages
Shipper load and count
Time period for filing claims/suit
Liability for dangerous or explosive goods
“Received subject to…”
• Old language: “received subject to the classifications and tariffs in
effect on the date of the issue of this shipping order”
• This language should be taken out because according to case law, it
gives the shipper the argument that the bill of lading did not
incorporate the carrier’s tariff and the carrier can be held liable for
substantially more
• New language: replace with new, modern, carrier favored language
“received, subject to individually determined rates or contracts that
have been agreed upon in writing between the carrier and shipper,
if applicable, otherwise to the rates, classifications and rules that
have been established by the carrier and are available to the
shipper, on request” (*make sure you have a rate schedule with
limitation of liability in it or a separate contract between shipper
and your company*)
BILL OF LADING SECTION 7 TERMS AND CONDITIONS
LANGUAGE
• “Subject to Section 7 of Conditions, if this shipment is to be
delivered to the consignee without recourse on the consignor,
the consignor shall sign the following statement: The carrier
shall not make delivery of this shipment without payment of
freight and all other lawful charges.”
• Execution of this can arguably preclude your company from
collecting from the consignor/shipper unless the shipment is
also marked “prepaid”; this becomes problematic when the
shipment was to be paid by the shipper, but this section is
executed, and the shipper goes bankrupt
DECLARATION OF VALUE
• If a value is declared on the property, it is important to also
include the following language:
“Declaring a value does not, by itself, increase carrier liability
above the default limitation listed below”
• Also, make sure you have a default limitation. Including these
two things can significantly reduce your level of liability.
NO CONSEQUENTIAL, PUNITIVE, OR SPECIAL
DAMAGES
• As a carrier, you can further limit your liability exposure by
including language that states under no circumstances will
you be liable for consequential, punitive, or special damages.
SHIPPER LOAD AND COUNT
• SLC is addressed in the Bill of Lading Act, 49 U.S.C.
§80113
– “A common carrier issuing a bill of lading is not liable for
non-receipt, misdescription or improper loading when (1)
the goods are loaded by the shipper, and (2) the bill
contains the words ‘shipper’s weight, load, and count,” –
language indicative of the shipper having loaded the goods
– Statute is intended to shield a carrier from responsibility
for delivered goods when the carrier and driver had no
opportunity to inspect, correct or approve the manner in
which the load was loaded or secured
SHIPPER LOAD AND COUNT
• You must consistently ensure the phrase “shipper’s weight,
load, and count” are stated on the bill of lading prior to
execution. In absence of the language on the original BOL,
drivers should be instructed to place “SLC” on every bill of
lading in which they were denied the opportunity to observe
the loading of freight
• Claims example: You have been hired to transport a load of widgets.
You load the wrapped widgets onto your truck, transport them to
their destination, and offload them. Upon offloading, water damage
is discovered. **IF SLC is on the BOL, then you have a defense that
the water damage is not your responsibility.
SLC AND SPENCE V. ESAB GROUP INC.
• In 2010 3rd Circuit Court of Appeals rejected the argument
that federal trucking regulations preclude Pennsylvania from
imposing historically carrier-related safety obligations on
shippers
• In Spence the shipper packaged the load into boxes, stacked
them on to pallets, stretch-wrapped the pallets, and loaded
them with a forklift onto the truck. The shipper allowed the
driver to secure the cargo, but with load star cleats furnished
by the shipper. Once secured, the driver drove a short
distance and upon rounding a corner lost control of the
tractor-trailer as it overturned. The driver claimed the
accident and his injuries were caused by the shipper’s failure
to prevent the load from laterally shifting on the bed of the
truck.
SPENCE SAYS SHIPPER HAS DUTY OF CARE
• The 3rd Circuit Court of Appeals reversed a decision by the U.S.
District Court, holding that the FMCSA regulations that
require the Carrier to safely secure cargo to prevent shifting
during transit should not be interpreted so broadly as to
ignore that shippers my share responsibilities for shifting
loads under certain circumstances
• “Where there is evidence that a shipper undertook to load
and secure the cargo being transported by a third-party
carrier, the shipper also bears an obligation to exercise
reasonable care”
• SLC on the bill of lading greatly bolsters this argument
• Spence v. ESAB Group, Inc., 623 F.2d 212 (3rd Cir. 2010).
TIME PERIOD FOR FILING CLAIMS/SUIT
• Include language that there are 9 months from the date of
loss to file claims; and, 2 years from denial of a claim to file
suit.
LIABILITY FOR DANGEROUS OR EXPLOSIVE GOODS
• You should always know what the shipper’s freight contains,
particularly if it is dangerous or explosive
• Include the following language in your bill of lading to further
protect you: “Every party, whether principal or agent, shipping
explosives or dangerous goods without previous full written
disclosure to the carrier of their nature, shall be liable for and
indemnify the carrier against all loss or damage caused by
such goods, and such goods may be warehoused at owner’s
risk and expense or destroyed without compensation
WIND FARM TRANSPORTATION CONTRACTS
 Contractual Provisions
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Shipper Obligations
Carrier Obligations
Carrier Drivers and Equipment
Indemnity and Defense
Form of Receipt
Billing payment and claims
Liability
Detention
Insurance
Waiver of Subrogation
Termination
Confidentiality
Force Majeure
Representations and Warranties
SHIPPER OBLIGATIONS
• Tender freight to Carrier
• All dims and weights must be accurate
• Schedule must be accurate; all changes must be made within
reasonable period of time for carrier to replace and
reschedule its own business
• Warrants suitable ingress and egress to and from origin and
destination to allow for safe transportation of wind
components
CARRIER OBLIGATIONS
• Deliver goods safely
• Subcontract allowed – as a Carrier, are you allowed under the
agreement to subcontract your obligations?
• Securement – explicitly outline your obligations for securing
the load
• Follow all applicable rules/regulations
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Hours of service
Load regulations
Company policies/procedures
DOT rating
CARRIER DRIVERS AND EQUIPMENT
• Have equipment necessary to do the job
• Have competent drivers to do the job
• Pay for operating costs of transportation such as fuel, tires,
maintenance, etc. (unless such maintenance is caused by poor
site conditions, in which case the shipper pays)
INDEMNITY AND DEFENSE
• Must be reciprocal
• Cannot defend and indemnify for shipper’s own negligence
and wrongdoing (this is now the law in many states)
• Will agree to defend and indemnify for claims resulting from
carriers negligence or willful misconduct arising from
contractual obligation to shipper
INDEMNIFICATION
• The following states have enacted motor
carrier anti-indemnification laws:
•Alaska
•Arizona
•California
•Connecticut
•Florida
•Georgia
•Illinois
•Indiana
•Iowa
•Louisiana
•Maine
•Maryland
•Missouri
•Nebraska
•New Mexico
•North Carolina
•Oregon
•Pennsylvania
•Utah
•Washington
FORM OF RECEIPT
• Uniform bill of lading
• Signed by both Carrier and Shipper
BILLING PAYMENT AND CLAIMS
• 30 days from receipt of Bill of Lading
• 1% late fee/month after 30 days
LIABILITY
• $2.50 per pound of lading
• In rare cases, agree to insure for actual loss as measured by
manufactured cost of goods sold (not full replacement value)
• Carrier not responsible nor liable for loading and unloading;
securement is only responsibility
• Salvage – if carrier is liable for full value, they get salvage or a
fair market value salvage credit
• Shipper has 90 days from receipt of BOL to file claim
• Not set offs against freight charges owed to carrier
• No liability for consequential, incidental, indirect, or
liquidated damages
LOSS DAMAGE
• This becomes a huge issue in energy/wind farm trucking
claims
• If a substantial piece of equipment is damaged during
transportation, the risk is present that the warranty on the
equipment may be voided by the manufacturer
• Make sure you have favorable language present to avoid this
risk, as well as consequential damages, loss of use, etc.
DETENTION
• 2 free hours at loading and unloading. For wind – 6 free hours
at loading and unloading
• Starts when the truck arrives
• Only in cases where there is a schedule that governs
detention – the schedule cannot be changed unreasonably. If
changes, it must be done so in an adequate amount of time
for carrier to adjust its schedule without suffering economic
loss (extra permits, escorts, sitting an extra day) such loss
must be paid by shipper that changed schedule unreasonably
INSURANCE
• Property damage and cargo to cover liability amount
• Employers Liability, Workers Comp, Comprehensive General
Liability
• Can add shipper as additional insured in rare cases, but only if
requested and not for Workers Comp or Employer’s liability
WAIVER OF SUBROGATION
• Cannot waive insurers rights of subrogation
• In rare cases, may agree to waive it with the following
language added “unless claim is caused by shipper’s
negligence or willful misconduct”
TERMINATION
• Must be reciprocal
• Either party has the right to terminate for material breach of
contract immediately
• Either party has right for no reason at all, with 30 days notice
• Automatic right to cure breach – deal with on a case by case
basis
CONFIDENTIALITY
• Allowed to disclose the existence of the contract, but not the
contents of the contract
FORCE MAJEURE
• An event out of the control of the parties occurs that causes a
breach of the contract
• Relieves parties from obligations under the contract while
condition exists, including cargo liability while loaded on
carrier’s trailer
• Include 24 hour notice requirement
REPRESENTATIONS AND WARRANTIES
• Can include that shipper and carrier represent and warrant
that they are able and qualified to do those things outlined in
shipper obligations, carrier obligations, and carrier driver and
equipment
INDEPENDENT CONTRACTOR ESCORT AGREEMENT
 Contractual Provisions
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Independent Contractor Relationship
Payment Process
Obligations of Contractor
Indemnification
Insurance
 Primary non-contributory general liability insurance
 Excess/umbrella
 Inland marine insurance
 Worker’s Compensation Insurance
 Additional Insured Status
 Waiver of Subrogation
INDEPENDENT CONTRACTOR RELATIONSHIP
• Independent contractors have the potential to cause your
company significant liability; the independent contractor has
your company’s logo and info displayed on the tractor and
therefore represents your company any time its on the road
• Include language that recognizes the relationship is that of a
company and an independent contractor, and not as an
employer-employee relationship
PAYMENT PROCESS
• It is important for both parties, especially in the independent
contractor situation, to outline how the contractor is to be
paid
• This is also the place to outline any fringe benefits that may or
may not be included, as well as how any advances from the
company are to be handled and deducted from the
contractors pay
OBLIGATIONS OF CONTRACTOR
• Included in this section should be which party is responsible
for operating expenses of the equipment, fuel, oil,
maintenance, repairs, taxes, fines, violations, etc
• This is also the place to outline contractors required
compliance with all applicable laws; maintaining a valid
driver’s license; requirement that contractor operate in a safe
and prudent manner, etc.
INDEMNIFICATION
• Many states have started to enact antiindemnification statutes for the transportation
industry, like those for construction contracts that
relate to crane and rigging
• These statutes bar indemnity for sole or partial fault,
so that each party can only indemnify the other for
their own negligence
MOTOR CARRIER/SHIPPER AGREEMENT
 Contractual Provisions
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Scope of Agreement/DOT Rating
Rates/Charges/Payment Terms
Freight Documentation
Insurance
Indemnity
Cargo Liability
Sealed Shipment
SCOPE OF AGREEMENT/DOT RATING
• This section should clearly outline how long the agreement is
in effect, and whether each party may terminate the
agreement with or without cause
• This section should also define the Carrier as a motor carrier
under 49 U.S.C. 12102, so that all rights and duties of the
federal law govern the contract, unless otherwise excluded
• It is also helpful to clearly state the Carrier’s DOT rating in the
contract
RATES/CHARGES/PAYMENT TERMS
• This section is important, particularly if you are dealing with
billings to 3rd parties.
• The best practice, is to state that the Shipper is still held
responsible for all freight and related transportation charges
under the Agreement, even if the Carrier is to bill a 3rd party.
This ensures your company will be paid for the work
performed. Even if you agree to bill a 3rd party, it is important
for the Shipper to agree to guarantee payment and stand as
the primary debtor
FREIGHT DOCUMENTATION
• This provision should clearly state that the Parties may use
another document for the purpose of documenting pick-up
and delivery of freight, either a uniform freight
documentation form, or bill of lading, but that the master
agreement shall prevail over anything appearing in those
forms
• The Uniform Freight Documentation Form should contain:
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Carrier’s contact information
Shipper’s contact information
Where and when the freight was received
That the property was in good order except as noted
Who it was consigned to/destination address
Who is paying
The weight/class/type of freight and whether it is hazardous
INSURANCE AND INDEMNITY
• The insurance and indemnity provisions should be tailored, as
previously discussed, to be valid under any applicable state
anti-indemnification laws
• Any additional insured endorsements shall also be provided,
as previously discussed
CARGO LIABILITY
• This provision relieves carrier from liability in certain instances
that are out of their control (i.e. Acts of God, etc)
• It should clearly cap liability and define how liability is to be
determined based on loss or physical damage to the cargo
• This section should also clearly state the time period in which
the Shipper may file a claim for loss or damage
• Of utmost importance is language stating that the Carrier shall
not be liable to Shipper or any 3rd party for special, incidental,
or consequential damages that relate to loss, damage, or
delay to a shipment
SEALED SHIPMENT
• Having the proper “sealed shipment” and “shipper load
and count” language in your contract can save you from
significant liability
• SLC is addressed in the Bill of Lading Act, 49 U.S.C.
§80113
– “A common carrier issuing a bill of lading is not liable for
non-receipt, misdescription or improper loading when (1)
the goods are loaded by the shipper, and (2) the bill
contains the words ‘shipper’s weight, load, and count,” –
language indicative of the shipper having loaded the goods
– Statute is intended to shield a carrier from responsibility
for delivered goods when the carrier and driver had no
opportunity to inspect, correct or approve the manner in
which the load was loaded or secured
SEALED SHIPMENT
• Chain of custody for seal
– Along with the SLC language in the bill of lading, the chain of custody
for the seal continues to offer the strongest evidence that at a
minimum, the load was not disturbed prior to removal by the
consignees or consignee's witness
– Continuation of the shipment under seal makes it more difficult for
the shipper to reverse the presumption and how the carrier was
negligent
– When the bill of lading contains SLC language and there is evidence
the seal remained intact during transit, the burden is on the shipper to
establish that an event occurred in transit that adversely impacted the
condition of the load as transferred by the shipper
BROKER-CARRIER CONTRACTS
 Contractual Provisions
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Relationship of Parties
Term of Agreement
Payment/Cargo Liens
Responsibility for Personnel/Safety Rating
Loss/Damage/Delay of Goods
Insurance
Indemnity
Non-Solicitation
RELATIONSHIP OF PARTIES
• This provision should explain the relationship between the
Carrier and the Broker; the Carrier’s safety rating, license
number; and, a statement that the broker is hiring the carrier
to perform contract carrier services, and there is no
employer/employee relationship
TERM OF AGREEMENT
• Again, it is important to clearly state how long the agreement
is in effect, and any termination rights of either part
• It is also helpful to state what services the carrier will be
providing and whether there is a “minimum shipment
guarantee” on the part of the broker, or a minimum capacity
guarantee on the part of the carrier
• Rates and charges relevant to the agreement can also be
included here
PAYMENT AND CARGO LIENS
• The contract should clearly state how and when the broker
will pay the carrier. It should also include whether the broker
will be liable for any late payment fees or collection costs, and
whether carrier may contact broker’s customers regarding
payment
• Depending on whether you are operating as the carrier or
broker, you may also want to have, or waive, the right to any
lien on cargo or other property
RESPONSIBILITY FOR PERSONNEL/SAFETY RATING
• The contract should include language that both the carrier,
and the broker, assume full responsibility for their personnel,
including compliance will all applicable laws and regulations,
payroll taxes, social security, unemployment insurance, etc.
• Neither party shall be an agent for the other
• If desired, you can also include language that in the event the
carrier’s safety rating becomes unsatisfactory, the broker may
elect to terminate the agreement
LOSS, DAMAGE, OR DELAY OF GOODS
• Depending on whether you are acting as the broker or carrier,
you will also want to add in language regarding whether the
carrier shall be liable for the loss, damage, or delay of goods
while in carrier’s possession
INSURANCE AND INDEMNITY
• The insurance and indemnity provisions should be tailored, as
previously discussed, to be valid under any applicable state
anti-indemnification laws
• Any additional insured endorsements shall also be provided,
as previously discussed
NON-SOLICITATION
• If you are operating as the broker you will want to have a nonsolicitation clause in the contract (if you’re the carrier you will
want to negotiate to not have this clause)
• The non-solicitation clause should state that for a period of 12
months, the carrier will not “back-solicit” any customer of
broker where the availability of such traffic first became
known to carrier as a result of broker’s efforts
• You can also include a calculation for damages should the
carrier violate this 12 month period
CRANE & RIGGING
PART II: CRANE & RIGGING
CONTRACTS CHECKLIST
Crane Companies Can Work under
multiple Contract Agreements
for the Same Project
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Master General Contract Agreement
Subcontract Agreement
Crane Rental Agreement
Daily Work Ticket
Master Agreement
• Will contain Contractual Risk Transfer language in favor of the:
Owner
Architect
General Contractor
(Downstream Risk Transfer)
Subcontract Agreement
• Will contain Contractual Risk Transfer language in favor
of the:
 Subcontractor & also will reference or “tie-in” the risk of all of the
subcontractor’s upstream exposure from the Master Agreement.
(Downstream Risk Transfer)
Effective Contractual Risk Transfer Management Requires
Coordination From Multiple Players
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Crane Company Management
Legal Counsel
Insurance Agent / Broker
Claim Professional / Adjuster
Defense Counsel
Legal Disclaimer
Contracts including Indemnification and Hold Harmless clauses
should be reviewed by Legal Counsel prior to signing!!!!!
Legal Counsel will determine issues such as:
 Statutory Compliance
 Enforceability
INDEMNIFICATION CLAUSES
Type 1: “Broad Form” Indemnity Clause
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Includes Indemnitee’s Sole Negligence
Crane Company:
Negligence or Fault ( 0 – 100% )
Crane Company pays ( 100% )
Broad Form
Crane Company agrees to defend, indemnify and
hold harmless Contractor, Owner, their agents and
employees from and against any and all claims
arising out of or occurring in connection with the
performance of the work by Crane Company whether
or not caused by the negligence of the indemnified
parties and including the sole negligence of the
Contractor.
INDEMNIFICATION CLAUSES
Type 2:
“Intermediate Form” Indemnity Clause
 Includes 100% indemnity if claim is caused “In Whole or In
Part” by Crane Company ( Similar to most Additional Insured
language )
 Crane Company:
Negligence or Fault (1 – 100% )
Crane Operator pays ( 100% )
Intermediate Form
Crane Company agrees to defend, indemnify and hold
harmless Contractor, Owner, their agents and
employees from and against any and all claims
arising out of or occurring in connection with the
performance of the work by caused in whole or in
part by the negligence of the Crane Company except
excluding the sole negligence of the Contractor
INDEMNIFICATION CLAUSES
Type 3: “Comparative Fault” Indemnity Clause
 Includes Indemnity only for the portion of loss caused by or
the extent of the negligence of the Crane Company
 Crane Company:
% Fault
Negligence or Fault (20% ) ( 50%)
% Damages
Crane Operator pays ( 20% ) (50%)
Limited or Comparative
Crane Company agrees to defend, indemnify and hold
harmless Contractor, Owner, their agents and employees from
and against any and all claims arising out of or occurring in
connection with the performance of the work but only to the
extent caused by the negligent acts or omissions of the
Crane Company.
Responding to Indemnity
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Tolerance for Risk Transfer
What is the scope of work?
Who controls the work? Project?
• Who signals the operator? “Qualified Signal Person”?
• Who will perform the rigging? “Qualified Rigger”?
Who is the client?
What the job represent in terms of $$$$$?
Responding to Indemnity
Crane Company’s obligation to defend, indemnify or hold harmless
shall be limited to the limits of coverage stipulated in the insurance
requirements section of the contract and further subject to the
terms and exclusions of such insurance. (Watch out for words like
“irrespective of limits”)
* INDEMNITY = INSURANCE REQUIREMENTS *
This is good language to use if you can
negotiate it into an agreement
Add this whenever or wherever you can“but only to the extent caused by the negligent acts or omissions of the
Crane Company.”
A Double Edged Sword
• You have to be careful---where they can’t get you tied up with
Indemnity they will do so with Additional Insured provisions
• Watch what you agree too
• The Progressively Narrowing Coverage of CG 20 10:
Contractors and Additional Insured Endorsements
Additional Insured =
Broad Form Indemnity
Indemnitee typically require additional insured status in an
attempt to circumvent State Statutes prohibiting the transfer of
fault or negligence in indemnity provisions. This goal can be
achieved by requiring the use of specific additional insured
endorsements, e.g. CG 20 10 11 85
Insurance Requirements and
“Additional Insured”
Lets look at:
Contract Insurance Requirements
Additional Insured issues
“Additional Insured Form”
Here's what it looks like
CG 20 10 11 85
CG 20 10 10 01
CG 20 10 07 04
TCG 20 10 07 04
Caused by
instead of
arising out of
Manuscript endorsement limiting primary
and non-contributory status only apply to
the sole Negligence of the named
insured (Crane Company)
TGL 20 10 07 04
Caused by
instead of
arising out of
Manuscript endorsement limiting primary
and non-contributory status only apply to
the Negligence of the named insured
(Crane Company)
When asked to sign Upper Tiered Contracts
• Try to match up the Indemnity with the Additional Insured
provisions
• If limited indemnity don’t agree to broader AI status—get
limited AI status as well
• Always try to agree to “caused in whole or in part” instead of
“arising out of” the best would be for “your sole negligence”
or “your negligence” but that’s harder to accomplish
Crane Rental Agreement
Should:
 Have a operator maintained and bare rental versions
 Be drafted with State specific indemnification language
 Refer to the ASME B30.5 ( 2007 )
 Refer to the New OSHA 29 CFR subpart CC 1926, Specifically
with respect to selection of competent and “qualified” signal
persons and “qualified” riggers”
 State that the agreement is in effect for a duration of one year
 Address responsibility for Powerlines, Ground Conditions,
Rigging
 No reliance on LMI
(Upstream Risk Transfer)
Crane Rental Agreement
TERMS AND CONDITIONS OF CONTRACT (TX)
1. INDEMNIFICATION (FOR ALL CONTRACTS EXCEPT FOR CONTRACTS PERTAINING TO A WELL FOR OIL, GAS,
OR WATER OR TO MINE FOR A MINERAL) -- LESSEE AGREES TO INDEMNIFY AND SAVE LESSOR, ITS EMPLOYEES
AND AGENTS HARMLESS FROM ALL CLAIMS FOR DEATH OR INJURY TO PERSONS, INCLUDING LESSOR'S
EMPLOYEES, OF ALL LOSS, DAMAGE OR INJURY TO PROPERTY, INCLUDING THE EQUIPMENT, ARISING IN ANY
MANNER OUT OF LESSEE'S OPERATION. LESSEE'S DUTY TO INDEMNIFY THEREUNDER SHALL INCLUDE ALL
COSTS OR EXPENSES ARISING OUT OF ALL CLAIMS SPECIFIED HEREIN, INCLUDING ALL COURT AND/OR
ARBITRATION COSTS, FILING FEES, ATTORNEYS' FEES AND COSTS OF SETTLEMENT. LESSEE SHALL BE
REQUIRED TO INDEMNIFY LESSOR FOR LESSOR'S OWN NEGLIGENCE OR FAULT, WHETHER THE NEGLIGENCE
OR FAULT OF THE LESSOR BE DIRECT, INDIRECT OR DERIVATIVE IN NATURE.
HOWEVER, THE
INDEMNIFICATION OBLIGATION ABOVE SHALL NOT BE LIMITED IN ANY WAY BY ANY LIMITATION ON THE
AMOUNT OR TYPE OF DAMAGE, COMPENSATION, OR BENEFITS PAYABLE BY OR FOR THE LESSEE UNDER
WORKER'S COMPENSATION ACTS, DISABILITY BENEFIT ACTS, OR OTHER EMPLOYEE BENEFIT ACTS. THE
LESSEE'S OBLIGATIONS HEREUNDER SHALL FURTHER NOT BE LIMITED BY THE AMOUNT OF ITS LIABILITY
INSURANCE AND THE PURCHASE OF SUCH INSURANCE FOR LESSOR SHALL NOT OPERATE TO WAIVE ANY OF
THE ABOVE OBLIGATIONS. PURSUANT TO V.T.C.A. GOVERNMENT CODE §2252.902, LESSOR MAY NOT BE
INDEMNIFIED FOR ITS SOLE, JOINT, OR CONCURRENT NEGLIGENCE ON ANY STATE PUBLIC WORK UNLESS THE
LOSS OR LIABILITY IS CAUSED BY OR RESULTS FROM THE SOLE, JOINT, OR CONCURRENT NEGLIGENCE OF THE
LESSOR AND ARISES FROM THE BODILY INJURY OR DEATH OF (1) AN EMPLOYEE OF LESSEE; (2) LESSEE’S
SUBCONTRACTOR, SUPPLIER OR EQUIPMENT LESSOR; (3) ANY LOWER-TIER SUBCONTRACTOR, SUPPLIER, OR
EQUIPMENT LESSOR OF LESSOR OR (4) ANY INDEPENDENT CONTRACTOR DIRECTLY RESPONSIBLE TO A PERSON
DESCRIBED IN (1)- (3). THIS PROVISION IS SEPARATE AND DISTINCT FROM ANY OTHER PROVISION OR
PARAGRAPH IN THIS CONTRACT, INCLUDING ANY PROVISION OR PARAGRAPH CONCERNING PARTIAL
INDEMNIFICATION AND PROCUREMENT OF INSURANCE. IF THIS PARAGRAPH IS DECLARED INVALID, THEN ALL
OTHER PARAGRAPHS OF THIS CONTRACT SHALL STAND.
MUTUAL INDEMNIFICATION (ONLY FOR CONTRACTS PERTAINING TO A WELL FOR OIL, GAS, OR WATER, OR TO
MINE FOR A MINERAL, PURSUANT TO V.TCA. CIVIL PRACTICE CODE §127.001-127.007) – LESSOR AND LESSEE
AGREE TO INDEMNIFY EACH OTHER AND EACH OTHER’S CONTRACTORS AND THEIR EMPLOYEES AGAINST
LOSS, LIABILITY OR DAMAGES ARISING IN CONNECTION WITH BODILY INJURY, DEATH, AND DAMAGE TO
PROPERTY OF THEIR RESPECTIVE EMPLOYEES, CONTRACTORS OR THEIR EMPLOYEES, AND INVITEES OF EACH
PARTY ARISING OUT OF OR RESULTING FROM THE PERFORMANCE OF THE CONTRACT. THIS PROVISION ONLY
APPLIES TO CONTRACTS FOR A WELL FOR OIL, GAS, OR WATER, OR TO MINE FOR A MINERAL, PURSUANT TO
V.T.C.A. CIVIL PRACTICE CODE §127.001-127.002. THIS PROVISION IS SEPARATE AND DISTINCT FROM ANY OTHER
PROVISION OR PARAGRAPH IN THIS CONTRACT, INCLUDING ANY PROVISION OR PARAGRAPH CONCERNING
INDEMNIFICATION AND PROCUREMENT OF INSURANCE. IF THIS PARAGRAPH IS DECLARED INVALID, THEN ALL
OTHER PARAGRAPHS OF THIS CONTRACT SHALL STAND.
2. INSURANCE –The Lessee agrees to purchase the following insurance coverages prior to the equipment’s arrival on the job site. The
Lessee shall procure the following coverages for Lessor: a.) worker's compensation and employer's liability insurance, with limits of at least
the statutory minimum or $1,000,000, whichever is greater; b) primary non-contributory commercial general liability insurance on an
occurrence basis, including bodily injury and property damage coverages with minimum limits of $1,000,000 per occurrence and $2,000,000,
in the aggregate; c) excess/umbrella non-contributory insurance in the amount of $5,000,000 and Lessee’s primary and excess/umbrella
policies must be endorsed so that they are primary and non-contributory to all of Lessor’s insurance policies; d) inland marine/all risk
physical damage insurance, on a primary non-contributory basis, to cover the full insurable value of the equipment, including any boom or
jib, for its loss or damage from any and all causes, including, but not limited to, overloading, misuse, fire, theft, flood, explosion, o verturn,
accident, and acts of God occurring during the rental term; e) all policies are to be written by insurance companies acceptable to the Lessor; f)
the Lessor and all affiliated partnerships, joint ventures, corporations and anyone else who Lessor is required to name as an additional
insured, are to be included as additional insured on all liability insurance policies, including excess/umbrella policies (ISO Form CG 20 10 10
01 and ISO CG 20 37 10 01 must be used), Lessee shall name Lessor as a Loss Payee on all insurance policies, and Lessee shall provide all
insurance certificates to Lessor when requested; g) all policies shall be endorsed to require the insurer to give thirty (30) days advance notice
to all insured’s prior to cancellation; h) all of Lessor’s, and anyone Lessor is required to insure, policies are excess over all of Lessee’s
policies. In the event of loss, proceeds of property damage insurance on the equipment shall be made payable to Lessor. Lessee's agreements
to indemnify and hold Lessor harmless from any liability, damage and loss are in addition to, and not an alternative to, these insurance
provisions and the purchase of any of the above coverages shall not operate to waive any of the above indemnity provisions. To the extent
that the Lessee may perform under this lease without obtaining the above coverages, such an occurrence shall not operate, in any way, as a
waiver of the Lessor's right to maintain any breach of contract action against the Lessee. Lessee hereby agrees to waive any and all rights of
subrogation and any and all lien rights (including those arising from worker's compensation/employer's liability policies or other employee
benefit programs, commercial general liability policies, or similar policies) which may accrue to it or its insurers. This shall include, but not
be limited to, rights of subrogation and lien rights. The Lessee understands that this waiver shall bind its insurers of all levels, and agrees to
put these insurers on notice of this waiver and to have any necessary endorsements added to the insurance policies applicable to this lease.
3. OPERATION OF EQUIPMENT -- It is expressly agreed by and between the parties hereto that the equipment and all persons operating,
repairing, or maintaining and assemble/disassemble the equipment are under the exclusive jurisdiction, supervision and control of Lessee
under this lease. It shall be the duty of Lessee to give specific instructions and directions to all persons operating, repairing, and maintaining
the leased equipment. Lessee agrees to provide or otherwise select competent and experienced personnel to direct the operation of the
equipment, in accordance with OSHA 29 CFR 1926.1428 signal person qualifications and Lessee further agrees that the standard of
care and responsibilities will be in accordance with all American National Standards Institute (ANSI) and that ASME B30.5-2007
(and as amended) shall be used when operating the equipment, specifically Chapter 5-3 Operation, as well as the OSHA 29 CFR
Subpart CC Cranes and Derricks in Construction sections 1926.1400 – 1926.1442Lessee specifically agrees that the Lessor has
absolutely no control over any person operating or assisting in operating, repairing, or maintaining the leased equipment. Lessor may provide
an operator with the equipment. Lessee may reject this operator; however, if operator is not rejected, the operator is under the Lessee’s
exclusive direction and control and is Lessee’s agent, servant, and employee. The lease payments made by the Lessee shall include the
operator’s wages, even though the operator's wages may be disbursed by the Lessor. This lease is upon the agreement of the parties that
Lessor has no right to replace or substitute personnel except at the direction of and with the approval of Lessee and that the Lessee shall have
the right to control, including the right of termination, and shall be deemed to have exercised that right as to all details or operation of the
leased equipment and personnel the Lessee selects to operate the leased equipment. If the equipment is damaged, involved in an accident, or
made inoperable in any way, the Lessee shall notify Lessor in writing within 48 hours of its occurrence, specifying the extent and nature of
the accident or damage. The cost of any repair necessary to restore the equipment to said condition shall be paid by Lessee. Any time beyond
the minimum term required to make such repairs shall extend the term of this agreement to include such reasonable additional repair time as
is necessary under the circumstances. Time is of the essence of this lease and all its provisions. Lessor’s failure to require strict performance
by Lessee of any of the lease provisions, or Lessor’s acceptance of late or partial performance hereunder, shall not constitute a waiver of any
prior defaults of Lessee, nor of Lessor’s rights under this agreement This lease shall be binding upon and shall inure to the benefit of the
parties and their successors, administrators, executors, trustees and assigns. This agreement shall be interpreted according to the laws of
Lessor’s location stated on the front page. This agreement shall be interpreted fairly and reasonably and neither more strongly for nor against
either party. THIS CONTRACT SHALL BE IN EFFECT FOR A DURATION OF ONE YEAR FOR THIS OR SIMILIAR EQUPIMENT
OR UNLESS EXPRESSLY TERMINATED IN WRITING BY Lessor. In the event that the Lessee loans, sublets or allows a third party to
use the crane and the services of the operator, Lessee agrees to have said third party sign and agree to the terms of this contract.
4. CONDITIONS –GROUND/POWERLINES/RIGGING—The Lessee hereby agrees that it will assume all responsibility for the ground
or soil conditions in the area where the crane is to be stored, parked or operated. The Lessee shall perform or have performed all necessary
inspections or testing to determine the nature of the ground or soil and its ability to support the crane while in operation or otherwise. If the
ground or soil condition is such that it cannot support the crane, the Lessee shall take all necessary measures to insure that these conditions
are remedied prior to the crane being placed on that ground or soil. These measures include, but are not limited to, the provision of proper
shoring or cribbing or other measures. Lessee assumes all responsibility to protect the equipment and persons in or around the equipment
from the danger of power lines. Lessee shall not expose the equipment or any persons in or around such equipment to the danger of energized
power lines. All power lines in the work area shall be identified prior to the work beginning. All power lines are to be de-energized prior to
the equipment being operated in or around such power lines. Lessee shall contact the local electric utility or other such authorized entity to
arrange to have the power lines de-energized prior to beginning work. Even if power lines are de-energized, Lessee shall keep the equipment
clear of such power lines at the distances required by OSHA, ANSI and any other safety regulations or standards. If it is not possible to deenergize power lines, then the Lessee shall be responsible for the insulating of any power lines, the grounding of all equipment and will be
required to use rigging or other equipment designed to prevent electrocution. Lessee is required to provide any and all rigging to be used with
the equipment. If chokers, slings, straps, chains, hooks, spreaders, fittings, rope or wire, etcetera; are loaned to the Lessee by the Lessor for
the Lessee’s convenience, and is solely at the Lessee’s responsibility. Lessee assumes responsibility for any defects in any rigging, whether
the property of Lessee or otherwise. Lessee assumes the responsibility for damage to any load on hook due to a failure of the rigging. Lessee
assumes the responsibility for the method of rigging and agrees that all persons involved in the rigging process are qualified
according to OSHA’s definition 1926.1401 under Lessee’s direct supervision and control.
5. NO RELIANCE ON LOAD MEASURING DEVICE -- If any crane has been fitted with a load measuring device, the Lessee hereby
acknowledges and agrees that the Lessor has made no warranties or representations whatsoever with respect to the ability of the said load
measuring device to accurately or consistently measure the weight of loads being lifted by such crane. The Lessee further acknowledges and
agrees that it is the responsibility of the Lessee to independently determine the weight of every load to be lifted by any crane comprising all
or portion of the equipment so as to ensure that any such load measuring device shall be used as an operator-aide only. As well, the Lessee
acknowledges and agrees that if he relies in any way whatsoever on any load measuring device that he does so completely at his own risk.
6. AUTHORIZED SIGNATURE - In the event this agreement has been executed on the reverse side by an individual on behalf of a
corporation or other business entity, the person whose signature is affixed hereto and the company for which the individual has signed this
agreement represent to Lessor that the individual signing has full authority to execute this agreement on behalf of said corporation or other
business entity.
Why include an AI provision in your own manned
contract???
• They may have a policy that has a blanket AI endorsement
similar to yours
• It will depend on how the endorsement is triggered
• Your Broker and your Carrier can work with you to limit your
liability especially if you did nothing wrong
• If you give it away we can’t get it back
Their policy may have the same or similar language
• In many cases your insurance
policy will have language similar
to this
• This endorsement will give
coverage to a customer of yours
when you are required by
contract to name that person
(business) on your policy in order
to do business with that person
(business)– see highlight
• Your policy will be triggered in the
event of a claim—duty to defend
However some of the endorsements in a policy
may require additional processing!!
Make sure your agent
understands your business
Your customer or you may have a different
Endorsement
• In this case the AI status
is afforded but only
when the person
(business) is named in
the schedule-see
highlight
Be careful what you give away and also pay
attention to what you get !!
• Thoroughly review both the
service agreement and the
insurance policies in question
with your broker before
becoming or accepting an
additional insured. Each of these
documents is capable of creating
insurance gaps for an
unsuspecting party. The key to
avoiding these traps is a clear
understanding of each party’s
expectations and careful review
of those documents to insure that
these expectations are
accomplished
Checklist!!!
• Limit your agreement
• Make sure if you give AI
on Indemnity to type 2
status or you are getting
or 3 if possible
AI status you get the
right form
• Look for words that may
tie you back in
• When giving AI status
throughout the contract
try to give 04 version
“caused in whole or in
• Make sure the state
part” When getting AI
statute allows for the
status try to get 01
indemnity called for in
version “arising out of”
agreement
Checklist!!
• Try to keep your subrogation rights in case of a loss so you can
come back to get what your entitled too
• Soil and site conditions should be a part of your contract.
Include language according to OSHA CC1400 and B30.5
Questions or Comments?