Contractual Indemnity Clauses
By Marcos Mendoza
Running a school is difficult business. Since school districts can’t economically provide all services, vendors must be found to assist with a variety of functions and events. This means dealing with third-party vendor contracts and the sometimes confusing language of legal agreements. We always advise any vendor agreements be reviewed by your general counsel prior to signing. Most attorneys for third-parties will remove the offending language from their standard agreements, but spotting it can be difficult for non-attorneys. Involving your general counsel to make drafting changes before signing is the most prudent course of action.
"We always advise any vendor agreements be reviewed by your general counsel prior to signing."
Many times, these documents have “hold harmless and indemnity” provisions which attempt to make the district responsible in the event there is an injury or property damage caused by the wrongdoing of a third party. Essentially, this language is a way for the vendor to transfer the liability of a risk to you. If this language is not taken seriously, contracts and agreements signed by district representatives can have unintended consequences.
Indemnity clauses and hold harmless provisions often arise when the district is negotiating for the use of third-party facilities, such as for graduation. They can also be seen when third-party vendors are hired to provide entertainment or equipment, such as inflatable sumo wrestling outfits or trampolines.
"Many lawyers representing third parties are simply unfamiliar with the obligations and immunities of school districts."
Indemnity clauses are viewed by the courts as an attempt to make a gift of public funds or lending public credit for private purposes. While restrictions in the Texas Constitution often render such contractual provisions void and unenforceable during litigation, it can take tens of thousands of dollars in legal fees and several months to get the matter dismissed. Many lawyers representing third parties are simply unfamiliar with the obligations and immunities of school districts.
Contracts are an inevitable fact of organizational life, particularly with the complex challenges faced by public education entities. Contact your general counsel when signing these vendor agreements - a little extra effort up front can save a great deal of difficulty and expense later.
If you have questions about this article, please contact Marcos Mendoza at 800.482.7276, ext. 3614 or 
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