Masonry Magazine August 1964 Page. 6
The Law of Contracts In Relation to Mason Contractors
Many of you, as mason contractors, are subcontractors and, therefore, are ordinarily presented with a contract covering your portion of the work which has been prepared by the general contractor. I caution you to remember that such contracts are drawn so as to favor the general contractor. There is nothing improper in this and I don't mean to suggest that general contractors seek by this means to take unfair advantage of subcontractors. It simply is quite normal and natural for the drafter of an agreement to resolve all matters in his favor. When you as a subcontractor, however, are the other party to such an agreement, it is imperative that you review its provisions carefully. Beware of any terms which you do not fully understand. Beware of what we lawyers call "incorporation by reference" those innocent-looking clauses that say that some other document is made a part of this agreement. Quite frequently, the architects' drawings and specifications, the general contractor's agreement with the owner for the entire project and the general conditions are so incorporated in the subcontractor's contract. If this is the case, be sure you review those other documents with care because you will be bound by the provisions thereof as firmly as if those provisions were set out in full in your contract. Remember, too, that there is nothing sacrosanct or inviolable about a printed contract. Do not hesitate to insist that unacceptable provisions be stricken or that a rider be attached to more fully describe the rights and duties of the parties. In other words, in your anxiety to get the business, don't blindly sign the contract which the "general" submits to you. Sure, you may have followed such a practice for years without any problem, but it is always that one exception that proves the rule and may be disastrous for you.
Let me now illustrate what I mean by discussing in detail a few of the contractual provision over which there has been a great deal of litigation in recent years.
At the top of the list is what is commonly known as a "hold harmless" provision. The usual situation is where the contractor agrees to hold the owner harmless from any loss or expense arising out of the performance of the contract and to indemnify him against such loss or expense. Ordinarily, the general contractor's contract with the owner contains a "hold harmless" provision for the benefit of the owner, and the sub-contractor's contract will include such a provision for the benefit of the general contractor.
Before I discuss the legal effects of a Hold Harmless Agreement, as viewed by the courts, I think it is necessary for you to recognize one basic principle: When you sign a Hold Harmless Agreement, you are bound by the terms and conditions contained therein. It is the responsibility of you or your legal adviser to determine what type of Hold Harmless Agreement, if any, should be incorporated into your contract with the owner or subcontractor.
In general, these agreements can be classified into three types, the first being the limited agreement; that is, you agree to indemnify the owner against your negligence or that of your subcontractor. Actually, this is simply a statement of your legal duty to make restitution for injuries caused by your or your agent's negligence.
The next type may be classified as a middle of the road agreement. In this agreement you agree to defend and pay where both you and the owner may be negligent, and, therefore, legally liable for the loss.
Lastly, you may sign a Hold Harmless Agreement in which you agree to indemnify the owner, not only for injuries caused by acts of you, your employees or your subcontractors and their employees, but also for injuries caused by the negligence of the owner. This last type is widely used since owners will and can impose upon the contractor the onerous duty of being liable for all injuries caused on the job. Naturally, the general contractor will try to place the subcontractor in the same position he is in with respect to the owner.
The contractor, in many cases, will not object at the time of the signing of the agreement because not only is he so anxious to get the job, but he may not understand the effect of the agreement. The legal problem arises when a contractor or subcontractor claims that under the particular language of the agreement, he is not liable for the injuries caused solely by the negligence of the owner, or where there is no written agreement, and the owner claims that the contractor must indemnify him.
According to ancient common law, a man could not contract away his liability because it was basic at that time that a man must be responsible for his wrongs. Such is not the law today, and the overwhelming majority of the courts recognize the right of the parties to freedom of contract. In recent years, through liberal interpretation of Hold Harmless Agreement, the courts have expanded the liability of the contractors for the negligent acts of the owner.
The leading case on this question undoubtedly Thompson Starrett v. Otis Elevator Co., Inc., 271 N. Y. 36, 2 N.E. 2d 35 (1936). It was decided there that the subcontractor and contractor could expressly contract that the subcontractor be liable for any damage sustained by the contractor, even though the entire fault might lie activiely on the shoulders of the contractor. This case, which now seems to have general acceptance in most jurisdictions and in the Federal courts, puts at rest the counter-argument that it was against public policy to pass the burden of paying for one's own wrong to another.
Naturally, in principle, this amounts to a liability insurance policy without specific monetary limits to coverage.
The court did, however, hedge this decision with the condition that the contractual language must be unequivocal and expressed. However, as time passed, the