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New Contracts in Kansas Can No Longer Contain Commonly Used Liability Indemnity Provisions

BY William R. Wood II
December 29, 2008

The 2008 Kansas Legislature passed a statute that declares void as against Kansas public policy long-standing contract risk-allocation provisions in many commercial contracts ' including franchise and dealership contracts. The story begins in 2004, when the legislature enacted a prohibition against liability indemnity provisions in construction contracts. After several years of discussions, lawmakers passed a new statute, which amends K.S.A. '16-121, to prohibit indemnity, additional-insured, choice-of-law and forum-selection provisions in a broad array of Kansas construction, manufacturing, transportation, dealership, and franchise contracts (collectively defined by the statute as “Contracts”) entered into after Jan. 1, 2009. As described below, certain aspects of the statute may also apply to contracts entered into before that date.

Common Provisions

Indemnity and insurance provisions are common and accepted terms in many commercial contracts. Indemnification agreements transfer risk and assign future liability arising from the contract performance. They remove doubt about future legal liability and avoid application of the comparative fault rule to marginally involved defendants. The Kansas courts have historically enforced these risk-allocation provisions.

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