Richard Pennington
This paper summarizes common constitutional and legislative limitations1 on the liability allocation approaches in state and local government contracting.
Requests by contractors for indemnification or hold harmless provisions2 often are opposed by governments based on constitutional principles. Other liability allocation techniques, such as warranty disclaimers, damage exclusions, ceilings on contractual damages orother liability, usually are not analyzed in terms of constitutional provisions. These clauses do not create liability of the state flowing to the contractor or a third party, but they limit possible damages that can be claimed against a contractor. This paper highlights common themes in analyzing the legality of these provisions.
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July 14, 2008
Terry Francke Senator Herb Kohl (D-WI) described the problem well in his testimony last December 11 before the Senate Judiciary Committee's Subcommittee on Antitrust, Competition Policy and Consumer Rights: "Far too often, court-approved secrecy agreements hide vital public health and safety information from the American public, putting lives at stake. The secrecy agreements even prevent government officials or consumer group from learning about and protecting the public from defective and dangerous products."
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The State Environmental Quality Review Act (SEQRA) was adopted by the Legislature with the intent, as expressed in SEQRA’s implementing regulations2, that “all agencies [state and local] conduct their affairs with an awareness that they are stewards of the air, water, land, and living resources, and that they have an obligation to protect the environment for the use and enjoyment of this and all future generations” (§617.1(b)) and that a “suitable balance of social, economic and environmental factors be incorporated into the planning and decision-making processes of state, regional and local agencies” (§617.1(d)). SEQRA also requires that the decision making process be open to the public and that the public be given certain opportunities to contribute directly to the process.
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