HB1581
To Amend The Law Concerning Unenforceable Provisions In Certain Construction Contracts.
Last Action (March 8, 2023): Recommended for study in the Interim by Joint Interim Committee on PUBLIC HEALTH, WELFARE AND LABOR COMMITTEE- HOUSE
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AI-Generated Summary
House Bill 1581 establishes a mandatory legal standard of care for licensed engineers and registered architects in construction contracts within Arkansas. It dictates that these professionals must perform services with the level of skill and care ordinarily provided by a competent peer in the state under similar circumstances, and as expeditiously as is prudent. The bill renders any contract provisions that attempt to establish a different, presumably higher or more restrictive, standard of care void and unenforceable. Furthermore, the legislation declares it against public policy for parties to a construction contract to require one another to be named as an additional insured on professional liability or workers' compensation insurance policies. Any contract terms requiring such additional insured status are deemed void and unenforceable. These changes apply to all construction contracts or agreements entered into on or after September 1, 2023.
Potential Impact Analysis
Who Might Benefit?
The primary beneficiaries are licensed engineers, registered architects, and their professional liability insurers. By setting a statutory standard of care and prohibiting certain contractual insurance requirements, these professionals are shielded from being held to contractually inflated standards or forced into potentially costly and administratively burdensome insurance arrangements that could increase their exposure to liability.
Who Might Suffer?
The primary groups negatively impacted are property owners, project developers, and general contractors who commission construction projects. These parties lose the ability to negotiate contract terms that require additional insured status for protection against risks, and they are restricted in their ability to contractually mandate a higher standard of performance or care beyond the state-defined baseline from architects and engineers.
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