Use Of Broad Indemnification Clause For Pollution Services

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It would not be ethical for Engineer A to continue to require a broad indemnification provision in all of his agreements where he provides pollution-related services. Engineer A should tailor the indemnification agreement to accept reasonable liability and consider current availability of professional liability insurance as appropriate to the project.

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A basic tenet of ethical conduct relates to the obligation of the engineer to accept responsibility for professional services that the engineer renders. This tenet is based upon the view that as a member of a learned profession, an engineer possesses skill, knowledge and expertise and is expected to use those attributes for the betterment of mankind. Engineers, through the enactment of engineering licensing laws and other legal restrictions, are granted the authority to practice their profession to the exclusion of others. As a result of this grant of authority, the law expects licensed engineers as they do other professions to perform professional services in a non-negligent manner. In addition, as with other professions, engineers are also expected to be personally liable for their acts, errors or omissions in the performance of their professional services. The Board has not reviewed Section III.9. of the Code with great frequency. In BER Case 86-4, the Board considered a case involving the modification of signed and sealed plans by other than the responsible engineer. In reviewing the case, the Board cited Section III.9. of the Code and expressed concern that the engineer in that case failed to acknowledge responsibility for the full design by notations on the drawings. The Board indicated that this failure suggested a lack of recognition on the part of the engineer that his modifications in the design might have an impact on the efficacy and integrity of the entire project design. For that reason, we found the engineer unethical in that case. However, BER Case 86-4 was rendered before a significant change was made to Section III.9. of the Code. Soon after BER Case 86-4 was issued, the Board of Ethical Review proposed an addition to Code Section III.9. which was adopted by the NSPE Board of Directors. That addition made the following revision (addition underlined): "III.9. Engineers shall accept responsibility for their professional activities; provided, howeve...

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Engineer A, a civil engineer, requires a broad indemnification provision in all of his agreements where he provides pollution-related services. Under the agreement, the client is required to "indemnify and hold harmless Engineer A for any damages or legal costs (including attorneys fees) arising from Engineer A's negligence in the performance of pollution-related services." Engineer A had inserted the indemnification provision during the early 1980's at the time of the "liability crisis" because of the unavailability of pollution-related insurance coverage. In recent years, the insurance industry has re-entered the pollution insurance market and now provides limited pollution coverage for an additional premium.

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Would it be ethical for Engineer A to continue to require a broad indemnification provision in all of his agreements where he provides pollution-related services?
Similar Cases

D-tuple Component Breakdown

121

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9/9

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Roles R
w=0.12 384D
Pollution Services Indemnification-Requiring Engineer
A licensed civil engineering role in which the engineer provides pollution-related consulting services under...
Engineer A Pollution Services Indemnification-Requiring Engineer
Civil engineer who requires clients to indemnify and hold him harmless for his own negligence in pollution-related...
Client under Pollution Services Agreement
Unnamed client(s) who retain Engineer A for pollution-related services and are contractually required to indemnify...
Pollution Services Indemnifying Client
A client role in which the party retaining pollution-related engineering services is contractually required to...
Professional Liability Responsibility-Accepting Engineer
A licensed professional engineering role in which the engineer bears the ethical obligation to accept personal...
Licensed Engineer Accepting Professional Responsibility
The archetypal licensed engineer discussed throughout the case who is obligated under NSPE Code Section III.9 to...
6 entities
Principles P
w=0.2 384D
Professional Accountability Invoked Against Engineer A Negligence Indemnification
Engineer A's requirement that clients indemnify him for his own negligence in pollution-related services directly...
Changed Circumstances Contractual Re-Evaluation Obligation Triggered by Insurance Market Re-Entry
The re-entry of the insurance industry into the pollution coverage market materially changes the circumstances that...
Negligence Liability Non-Transfer to Client Principle
Professional accountability principle establishing that an engineer may not contractually require a client to...
Ethics Code Living Document Adaptation Principle
Fundamental ethical principle recognizing that a professional ethics code is a living document that must...
Negligence Liability Non-Transfer to Client Principle Invoked in Pollution Services Agreement
Engineer A's broad indemnification clause - requiring clients to hold him harmless for his own negligence - violates...
Changed Circumstances Contractual Re-Evaluation Obligation
Professional ethics principle requiring engineers to periodically reassess the ethical justifiability of contractual...
Client Interest Primacy Invoked Against Engineer A Self-Protective Indemnification
Engineer A's indemnification clause serves his own financial self-protection at the direct expense of client...
Contractual Risk Transfer Ethical Residual Awareness in Pollution Services Context
Even where contractual risk transfer provisions exist in pollution-related engineering services, Engineer A retains...
Professional Liability Insurance Procurement Obligation When Reasonably Available
Domain-specific principle establishing that where professional liability insurance (or equivalent protection) is...
Learned Profession Personal Liability Acceptance Principle
Fundamental ethical principle establishing that membership in a learned profession - one granted exclusive authority...
Client Interest Primacy - Indemnification Clause as Self-Protection at Client Expense
Engineer A's routine use of client indemnification clauses for ordinary negligence - when professional liability...
Learned Profession Personal Liability Acceptance - Engineer A Pollution Services Context
Engineer A's obligation to accept personal responsibility for pollution-related professional services rendered,...
Professional Liability Insurance Procurement Obligation - Post-Liability-Crisis Market Normalization
Following the re-entry of major professional liability insurers into the A/E market - including limited coverage for...
Ethics Code Living Document Adaptation - Section III.9 Indemnification Exception Evolution
The NSPE Board of Ethical Review's re-interpretation of Section III.9 in light of normalized professional liability...
Changed Circumstances Contractual Re-Evaluation - Indemnification Clause Post-Liability-Crisis
Engineer A's obligation to reassess and eliminate the client indemnification clause for ordinary negligence now that...
15 entities
Obligations O
w=0.15 384D
Engineer A Pollution Services Insurance Procurement
Engineer A is obligated to procure available pollution-related professional liability insurance coverage now that...
Self-Negligence Indemnification Clause Prohibition Obligation
Duty of a licensed professional engineer to refrain from inserting contractual provisions that require clients to...
Engineer A Self-Negligence Indemnification Clause Prohibition
Engineer A is obligated to refrain from requiring clients to indemnify and hold him harmless for damages or legal...
Engineer A Client Interest Non-Subordination Faithful Agent Indemnification
Engineer A is obligated, as a faithful agent and trustee for his clients, to refrain from contractual arrangements...
Section III.9 Indemnification Exception Condition Verification Obligation
Duty of a licensed professional engineer to verify, before invoking the Section III.9 indemnification exception,...
Learned Profession Personal Liability Legal-Ethical Grounding Obligation
Duty of a licensed professional engineer, as a member of a learned profession granted exclusive authority to...
Cyclical Professional Liability Market Re-Assessment Obligation
Duty of a licensed professional engineer to periodically re-assess the professional liability insurance market to...
Engineer A Learned Profession Personal Liability Acceptance - Pollution Services
Engineer A, as a licensed professional engineer granted exclusive authority to practice by state licensing law, was...
Engineer A Ordinary Negligence Indemnification Prohibition - Post-Insurance-Market-Normalization
Engineer A was obligated to refrain from requiring clients to indemnify him for ordinary negligence in...
Changed Circumstances Contract Indemnification Clause Removal Obligation
Duty of a licensed professional engineer who originally inserted a self-protective indemnification clause into...
Pollution Services Professional Liability Insurance Procurement Obligation
Duty of a licensed professional engineer providing pollution-related consulting services to procure available...
Client Interest Non-Subordination to Engineer Self-Protective Indemnification Obligation
Duty of a licensed professional engineer acting as a faithful agent and trustee for clients to refrain from...
Engineer A Changed Circumstances Indemnification Clause Removal
Engineer A is obligated to re-evaluate and remove or substantially modify the self-negligence indemnification clause...
Engineer A Section III.9 Exception Condition Verification - Pollution Services Indemnification
Engineer A was obligated to verify, before continuing to require clients to indemnify him for ordinary negligence in...
Engineer A Insurance Procurement Obligation - Pollution Services Post-Market-Normalization
Engineer A was obligated to procure available professional liability insurance - including pollution-specific...
Engineer A Cyclical Market Re-Assessment - Post-Liability-Crisis Indemnification Clause Review
Engineer A was obligated to periodically re-assess the professional liability insurance market - particularly for...
16 entities
States S
w=0.1 384D
Pollution Insurance Market Re-Entry - Current Conditions
Engineer A's professional liability risk management options for pollution-related services
Broad Negligence Indemnification Provision - Engineer A Standard Agreement
Engineer A's standard service agreements for pollution-related services
Pollution Insurance Market Unavailability State
State in which professional liability insurance covering pollution-related engineering services is unavailable in...
Pollution Insurance Market Re-Entry State
State in which professional liability insurance for pollution-related engineering services has become available...
Broad Negligence Indemnification Provision Active State
State in which an engineer's standard contract requires the client to indemnify and hold harmless the engineer for...
Pollution Insurance Unavailability - Early 1980s Liability Crisis
Engineer A's professional liability risk management context for pollution-related services
Changed Circumstances - Insurance Now Available Despite Indemnification Clause Persisting
Engineer A's continued use of broad indemnification provision after pollution insurance became available
Professional Liability Insurance Affordability Constraint State
State in which professional liability insurance is technically available on the market but remains cost-prohibitive...
Professional Liability Insurance Obtainment Obligation Active State
State in which professional liability insurance for the relevant service domain is reasonably available and...
Cyclical Professional Liability Environment State
State in which the professional liability insurance market is recognized as inherently cyclical and subject to...
Post-Liability-Crisis Insurance Market Recovery Obligation State
Engineers providing professional services approximately seven years after the liability crisis peak
Ordinary Negligence Indemnification Prohibition Instance
Engineers who continue to require broad client indemnification for ordinary negligence after insurance market recovery
Cost-Prohibitive Insurance Affordability Constraint for Some Practitioners
Subset of engineering practitioners for whom professional liability insurance remains cost-prohibitive despite...
Cyclical Professional Liability Market Recognition by Ethics Board
NSPE Board of Ethical Review's interpretive framework for Code Section III.9
Changed Circumstances Rendering Contractual Justification Obsolete State
State in which a contractual provision adopted under conditions of necessity - where no alternative mechanism was...
Client Indemnification for Ordinary Negligence Ethically Impermissible State
State in which an engineer's contractual requirement that the client indemnify the engineer for ordinary negligence...
16 entities
Resources Rs
w=0.1 384D
NSPE Code of Ethics Section III.9
Central normative provision governing engineer acceptance of responsibility for professional activities and the...
BER Case 86-4
Cited as prior precedent in which the Board applied Section III.9 to find an engineer unethical for failing to...
Engineer Liability Indemnification Contract Standard
Professional norms and contractual standards governing the permissibility and ethical implications of engineers...
Pollution Liability Insurance Availability Standard
A professional and market-based standard reflecting the availability, scope, and adequacy of pollution liability...
Engineer-A-Pollution-Indemnification-Provision
Contractual mechanism by which Engineer A shifts liability for his own negligence to clients in pollution-related...
Pollution-Insurance-Market-Reentry
Factual reference establishing that the original justification for Engineer A's indemnification provision...
Professional Liability Insurance Market Conditions Assessment
Empirical market-condition reference used by the Board to determine that the original justification for the...
Engineer Liability Indemnification Contract Provision
Identified as the contractual mechanism engineers used during the liability crisis to require clients to indemnify...
Engineering Licensing Laws - Grant of Exclusive Practice Authority
Cited as the legal basis for the exclusive authority granted to licensed engineers to practice, and as the source of...
NSPE-Code-of-Ethics
Primary normative authority for evaluating whether Engineer A's broad indemnification provision - requiring clients...
10 entities
Actions A
w=0.1 384D
Reinterpret Section III.9. For Current Conditions
Insert Broad Indemnification Clause
Maintain Indemnification Clause Post-Crisis
Propose Code Section III.9. Amendment
4 entities
Events E
w=0.08 384D
Insurance Market Recovery
Section III.9. Reinterpretation Issued
Pollution Insurance Market Collapse
NSPE Code Section III.9. Adopted
4 entities
Capabilities Ca
w=0.07 384D
Engineer A Historical Liability Crisis Justification Temporal Boundary Recognition
Engineer A requires the capability to recognize that the 1980s liability crisis justification for his...
Pollution Professional Liability Insurance Market Monitoring and Procurement Capability
Capability of a licensed professional engineer providing pollution-related consulting services to actively monitor...
Engineer A Changed Circumstances Contract Clause Re-Evaluation
Engineer A requires the capability to recognize that the re-entry of the insurance industry into the pollution...
Engineer A Pollution Professional Liability Insurance Procurement
Engineer A requires the capability to recognize that pollution-related professional liability insurance is now...
Engineer A Client Financial Interest Protection in Contract Drafting
Engineer A requires the capability to recognize that his broad indemnification clause subordinates client financial...
Professional Liability Insurance Market Cyclicality Awareness and Re-Assessment Capability
Capability of a licensed professional engineer to recognize that the professional liability insurance market -...
Engineer A Client Financial Interest Protection - Pollution Services Indemnification Clause
Engineer A was required, as a faithful agent and trustee for his clients, to recognize that the client...
Engineer A Professional Liability Insurance Market Cyclicality Awareness - Pollution Services
Engineer A was obligated to monitor the professional liability insurance market for pollution-related services,...
Engineer A Ethics Code Living Document Temporal Adaptation - Section III.9 Indemnification
Engineer A was required to recognize that Section III.9's indemnification exception was adopted in response to...
Engineer A Self-Negligence Indemnification Clause Prohibition Self-Application - Pollution Services
Engineer A was required to recognize that contractual provisions requiring clients to indemnify and hold him...
Engineer A Changed Circumstances Indemnification Clause Re-Evaluation - Post-Market-Normalization
Engineer A was required to recognize that the indemnification clause originally inserted in response to the 1980s...
Engineer A Pollution Services Professional Liability Insurance Procurement - Post-Market-Normalization
Engineer A was obligated to actively monitor the professional liability insurance market for pollution-related...
Self-Negligence Indemnification Clause Prohibition Self-Application Capability
Capability of a licensed professional engineer to recognize that contractual provisions requiring clients to...
Section III.9 Indemnification Exception Purposive Scope Interpretation Capability
Capability of a licensed professional engineer to interpret NSPE Code Section III.9's indemnification exception...
Changed Circumstances Contract Clause Re-Evaluation and Removal Capability
Capability of a licensed professional engineer to recognize when a contractual provision that was originally...
Client Financial Interest Protection in Contract Drafting Capability
Capability of a licensed professional engineer, acting as a faithful agent and trustee, to recognize when proposed...
Historical Liability Crisis Justification Temporal Boundary Recognition Capability
Capability of a licensed professional engineer to recognize that a professional practice or contractual arrangement...
Engineer A Self-Negligence Indemnification Clause Prohibition Self-Application
Engineer A requires the capability to recognize that his broad indemnification provision - requiring clients to hold...
Learned Profession Personal Liability Acceptance Grounding Capability
Capability of a licensed professional engineer to understand and articulate the foundational legal-ethical basis for...
Ethics Code Living Document Temporal Adaptation Capability
Capability of a licensed professional engineer - and of professional ethics bodies - to recognize that a...
Insurance Affordability Exception Scope Calibration Capability
Capability of a licensed professional engineer to correctly calibrate the scope of the professional liability...
Engineer A Historical Liability Crisis Justification Temporal Boundary Recognition - Section III.9
Engineer A was required to recognize that the professional practice of requiring client indemnification for ordinary...
Engineer A Section III.9 Purposive Interpretation - Pollution Indemnification Clause
Engineer A was required to interpret Section III.9's indemnification exception purposively - understanding that it...
Engineer A Learned Profession Personal Liability Acceptance Grounding - Pollution Services
Engineer A was required to understand and apply the foundational learned-profession rationale for personal...
Engineer A Insurance Affordability Exception Scope Calibration - Pollution Services Post-Market-Normalization
Engineer A was required to calibrate the scope of the insurance affordability exception - recognizing that once...
25 entities
Constraints Cs
w=0.08 384D
Professional Liability Insurance Procurement Ethical Constraint
Ethical constraint requiring a licensed professional engineer providing professional services in a domain where...
Engineer A Self-Negligence Indemnification Clause Prohibition
Engineer A is ethically prohibited from maintaining a contractual provision requiring clients to indemnify and hold...
Engineer A Pollution Insurance Procurement Ethical Obligation
Engineer A is ethically constrained to procure available pollution-related professional liability insurance now that...
Engineer A Insurance Affordability Exception Scope Limitation
Even if Engineer A were to demonstrate that the available pollution-related professional liability insurance remains...
Engineer A Faithful Agent Client Interest Non-Subordination Indemnification
Engineer A's faithful agent and trustee duty to clients constitutes an ethical constraint prohibiting contractual...
Engineer A Cyclical Market Monitoring Procedural Constraint
Engineer A is procedurally constrained to monitor professional liability insurance market conditions on an ongoing...
Post-Code-Amendment BER Precedent Supersession Constraint
Ethical and interpretive constraint establishing that a BER case precedent decided prior to a material amendment to...
Living Ethics Code Current-Conditions Interpretive Constraint
Interpretive and ethical constraint establishing that the NSPE Code of Ethics must be read and applied in light of...
Cyclical Professional Liability Market Ongoing Monitoring - Engineer A Post-Crisis Indemnification Review
Because the professional liability insurance market is recognized as cyclical and fluid, Engineer A's obligation to...
BER Case 86-4 Post-Amendment Non-Controlling Authority - Section III.9 Indemnification
BER Case 86-4, decided before the material amendment to Section III.9 adding the indemnification exception, cannot...
NSPE Code Living Document Current-Conditions Interpretive Obligation - Section III.9 Indemnification Context
The Board must interpret Section III.9's indemnification exception consistent with current professional liability...
Engineer A Exclusive Practice Authority Personal Liability Acceptance - Pollution Services
Engineer A, as a licensed professional engineer granted exclusive authority to practice engineering by state...
Section III.9 Indemnification Exception Temporal Scope Limitation - Post-Liability-Crisis Market Recovery
The Section III.9 indemnification exception, adopted in response to the liability crisis conditions of the early...
Section III.9 Cannot-Otherwise-Be-Protected Condition Deactivation - Engineer A Pollution Services
The 'where the Engineer's interests cannot otherwise be protected' condition in Section III.9 is no longer satisfied...
Engineer A Gross Negligence Indemnification Scope Boundary - Pollution Services Clause
Even if Engineer A's indemnification clause were otherwise permissible under Section III.9, it cannot extend to...
Self-Negligence Indemnification Clause Ethical Prohibition Constraint
Ethical constraint prohibiting a licensed professional engineer from inserting or maintaining contractual provisions...
Changed Circumstances Contractual Provision Re-Evaluation Constraint
Ethical and procedural constraint requiring a licensed professional engineer to affirmatively re-evaluate and modify...
Necessity-Lapsed Risk Transfer Mechanism Continuation Prohibition Constraint
Ethical constraint prohibiting a licensed professional engineer from continuing to employ a contractual...
Insurance Affordability Exception Scope Limitation Constraint
Ethical constraint establishing that the exception to the professional liability insurance procurement obligation -...
Engineer A Changed Circumstances Indemnification Clause Re-Evaluation
Engineer A is ethically required to re-evaluate and remove or substantially modify the broad indemnification clause...
Engineer A Necessity-Lapsed Indemnification Continuation Prohibition
Engineer A is ethically prohibited from continuing to require clients to indemnify him for his own negligence...
Learned Profession Exclusive Authority Personal Liability Acceptance Constraint
Ethical and legal constraint establishing that a licensed professional engineer, as a member of a learned profession...
Liability Crisis Exception Temporal Scope Limitation Constraint
Ethical constraint establishing that the Section III.9 indemnification exception - permitting engineers to seek...
Section III.9 Indemnification Exception Condition-Dependency Interpretive Constraint
Interpretive constraint establishing that NSPE Code Section III.9's indemnification exception - permitting engineers...
Gross Negligence Indemnification Permissibility Boundary Constraint
Ethical constraint establishing that even where the Section III.9 indemnification exception is validly invoked -...
25 entities
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