Contractual Liability Clause:

A contractual liability clause is a provision in a construction contract that allocates the risk and responsibility for certain types of claims or damages between the parties. The clause typically requires one party, such as the contractor, to indemnify, defend, and hold harmless the other party, such as the owner, against claims or damages arising from the contractor’s work or operations, including claims related to bodily injury, property damage, or economic losses. The scope and extent of the contractual liability may be limited by factors such as the negligence or fault of the parties, the type or amount of damages, or the availability of insurance coverage. The purpose of the contractual liability clause is to provide a contractual basis for the parties to manage and transfer their respective risks and exposures, to clarify their rights and obligations in the event of a claim or dispute, and to ensure that the responsible party bears the cost and burden of any losses or liabilities. Contractual liability clauses are an important part of the risk allocation and insurance framework in construction contracts and should be carefully reviewed, negotiated, and coordinated with the parties’ insurance policies and risk management strategies.