INDEMNITY

Indemnity clauses in contracts must be approved by the General Counsel. As a general rule, the University does not agree to indemnity clauses. The following clause and explanation is typically given to other parties when the University is asked to agree to such a provision:

M E M O R A N D U M

TO: Whom It May Concern
FROM: Rick Johnson, General Counsel
DATE:
RE: Indemnity - North Dakota Law

NDSU will not agree to indemnify another party. N.D.C.C. ch. 32-12.2 covers NDSU for claims brought against it for certain acts of its employees within the scope of their employment. Currently, coverage is limited to $250,000/person and $1,000,000/occurence. Language that NDSU can use in contracts is:

NDSU's tort liability is governed by the North Dakota Tort Claims Act, N.D.C.C. ch. 32-12.2. Nothing herein shall preclude NDSU from asserting against any party any defenses to liability it may have under North Dakota law nor is anything herein intended to extend NDSU's liability beyond that provided by N.D.C.C. ch. 32-12.2.

The reason we cannot agree to a contractual indemnity clause is that, under North Dakota law, N.D.C.C. § 54-16-03, a state official cannot agree to take on an obligation for which there is no appropriation. It is a misdemeanor to do so under North Dakota law. N.D.C.C. § 54-16-05. Furthermore, the North Dakota Risk Management Fund (our state self insurance fund) will not provide coverage for liability assumed under a contract. N.D.C.C. § 32-12.2-02(3)(p).

Therefore, the purpose of the above language is to make it clear that NDSU's liability is limited to that covered by the North Dakota Risk Management Fund.

If you have any questions on this provision, you may contact me at 231-7215.