Beware of Personal-Liability Clauses – Even When Signing in Your Representative Capacity

January 31, 2018
David R. Cook Jr. – Autry, Hall & Cook, LLP

When a contract is drafted by a party, the other party expects some level of one-sidedness in favor of the drafter. But there are times when a contract goes too far. There are certain provisions that most persons in the construction industry would find unacceptable, unfair, and beyond the pale – even for a one-sided contract. Such a provision was arguably found in an electrical subcontract at issue in a 2014 opinion by a three-judge panel of the Georgia Court of Appeals. Unfortunately, due to long-standing Georgia law, the panel was forced to apply the provision as written.

In the case, a contractor hired a subcontractor to perform the electrical scope of work. When the subcontractor failed to pay a sub-subcontractor, the sub-subcontractor filed suit against the subcontractor, contractor, and the payment-bond surety. The contractor asserted a claim of indemnity against the subcontractor based on the sub-subcontractor’s claim.

Mr. Cook may be contacted at cook@ahclaw.com



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