Revised N.C. Gen. Stat. § 22B-1 Will Go Into Effect August 1st
Among the bills to emerge from the ongoing 2019 session of the North Carolina General Assembly is a structural and substantive revision of N.C. Gen. Stat. § 22B-1, which invalidates certain indemnity agreements in the construction industry. Among the substantive revisions are a new subsection (b) deems invalid any indemnity agreement unless “the fault of the promisor or its derivative parties is a proximate cause of the loss, damage, or expense indemnified.” This language would appear to clarify that a promisor under an indemnity agreement may not be held liable under that agreement for the actions of a someone other than its employees or subcontractors. It does not change the existing requirement that the promisee receiving indemnity under the agreement be free of negligence. However, the new language does present a potential internal conflict within the statute, since original language, providing that the statute does not prohibit an agreement providing for indemnity for damages resulting from the “sole negligence” of the promisor, remains in the amended statute.
Also, a new subsection (c) deems invalid any agreement by which a design professional promises indemnity for any damages caused by the design professional’s professional negligence. This language is entirely new and provides professionals licensed under Chapter 83A (architects), 89A (landscape architects), 89(C) (engineers and land surveyors), 89E (geologists), and 89F (soil scientists) with broad protection from indemnity obligations.
The new statute applies to contracts entered, amended, or renewed after August 1, 2019. Construction and design professionals, or those who contract with them, should study the new statute before entering into or amending any contract after August 1. Jacob Wellman and the construction law team at Teague Campbell are available to answer questions.