Indemnity and Liability Clause Pack - Arizona

INDEMNITY AND LIABILITY CLAUSE PACK — ARIZONA

Jurisdiction: State of Arizona
Governing Law: Arizona Revised Statutes; Arizona common law
Template Version: 2026-02-26

TABLE OF CONTENTS

• PART I: Legal Framework
• PART II: Corporate Indemnification Clauses
• PART III: Contractual Indemnity Clause Pack
• PART IV: Limitation of Liability Clauses
• PART V: Anti-Indemnity Considerations
• PART VI: Insurance Requirements
• PART VII: Arizona-Specific Practice Notes
• Sources and References

PART I: LEGAL FRAMEWORK

1.1 Arizona Corporate Indemnification Statutes

Arizona corporate indemnification is governed by Arizona Revised Statutes Title 10, Chapter 4, Article 5 (§§ 10-850 through 10-858). These provisions closely follow the Revised Model Business Corporation Act framework but include Arizona-specific provisions, particularly regarding mandatory indemnification of outside directors.

Statutory Structure:

Key provisions:

• Permissive indemnification (§ 10-851): A corporation may indemnify an individual made a party to a proceeding because the individual is or was a director against liability incurred in the proceeding if the individual's conduct was in good faith, and the individual reasonably believed (in the case of conduct in an official capacity) the conduct was in the best interests of the corporation, or (in all other cases) was at least not opposed to the best interests of the corporation, and in the case of any criminal proceeding, the individual had no reasonable cause to believe the conduct was unlawful. A corporation may not indemnify a director: (1) in connection with a proceeding by or in the right of the corporation in which the director was adjudged liable to the corporation; or (2) in connection with any other proceeding in which the director was adjudged liable on the basis of receiving an improper personal benefit.

• Mandatory indemnification (§ 10-852): Unless limited by its articles of incorporation, a corporation shall indemnify an outside director who was wholly successful, on the merits or otherwise, in defense of any proceeding to which the outside director was a party because of being a director, against reasonable expenses incurred by the outside director in connection with the proceeding. Arizona's provision for mandatory indemnification of outside directors goes beyond the standard MBCA provision.

• Advancement of expenses (§ 10-853): A corporation shall pay an outside director's expenses in advance of final disposition if the director furnishes: (a) a written affirmation of the director's good faith belief that the director has met the standard of conduct; and (b) a written undertaking to repay the advance if the standard was not met. For directors who are not outside directors, the corporation may advance expenses under similar conditions.

• Insurance (§ 10-857): A corporation may purchase and maintain insurance on behalf of an individual who is or was a director, officer, employee, or agent against liability asserted against or incurred by the individual in that capacity, whether or not the corporation would have the power to indemnify or advance expenses under this article.

• Non-exclusivity (§ 10-858): This article does not limit a corporation's power to pay or reimburse expenses incurred by a director, officer, employee, or agent, to indemnify or advance expenses to a director, officer, employee, or agent, or to procure or maintain insurance on behalf of such persons.

1.2 Common Law Indemnity in Arizona

Arizona courts recognize both express and implied contractual indemnity:

• Express indemnity: Enforceable when clear and unambiguous, including provisions requiring indemnification for the indemnitee's own negligence (subject to anti-indemnity statute limitations in construction contracts under A.R.S. § 34-226).
• Implied indemnity: Recognized in limited circumstances, including employer/employee relationships, principal/agent relationships, and situations where one party bears primary liability and the other is only secondarily or vicariously liable.

1.3 Contractual Indemnity Under Arizona Law

Arizona enforces contractual indemnity provisions in commercial agreements, subject to the following limitations:

• Provisions in construction contracts are restricted by A.R.S. § 34-226 (see Part V).
• Provisions in architect-engineer dwelling contracts are restricted by A.R.S. § 32-1159.01.
• Indemnification provisions are construed according to their plain meaning; Arizona does not require specific "magic words" for indemnification for the indemnitee's own negligence in non-construction contracts.
• Arizona follows a pure comparative fault system under A.R.S. § 12-2505, which may affect interpretation of indemnification obligations.

PART II: CORPORATE INDEMNIFICATION CLAUSES

2.1 Mandatory Indemnification Provision

CLAUSE 2.1 — MANDATORY INDEMNIFICATION

The Corporation shall indemnify each person who was or is a party to, or is threatened to be made a party to, any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative, or investigative (including any action by or in the right of the Corporation), by reason of the fact that such person is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, to the fullest extent permitted by A.R.S. §§ 10-850 through 10-858, as the same exist or may hereafter be amended, against expenses (including attorney fees), judgments, fines, penalties, and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit, or proceeding.

Mandatory Component — Outside Directors (§ 10-852): Unless limited by the Articles of Incorporation, the Corporation shall indemnify an outside director (as defined in A.R.S. § 10-850) who was wholly successful, on the merits or otherwise, in the defense of any proceeding to which the outside director was a party because of being a director of the Corporation, against reasonable expenses incurred in connection with the proceeding.

Mandatory Component — All Directors (§ 10-852): Unless limited by the Articles of Incorporation or § 10-851(D), the Corporation shall indemnify a director who was wholly successful, on the merits or otherwise, in defense of any proceeding to which the director was a party because of being a director, against reasonable expenses incurred in connection with the proceeding.

2.2 Permissive Indemnification Resolution

CLAUSE 2.2 — BOARD RESOLUTION FOR PERMISSIVE INDEMNIFICATION

RESOLVED, that the Corporation may indemnify [________________________________] ("Indemnitee") against liability incurred in connection with [________________________________] (the "Proceeding"), subject to the following determinations required by A.R.S. § 10-851:

(a) Indemnitee's conduct was in good faith;

(b) In the case of conduct in Indemnitee's official capacity with the Corporation, Indemnitee reasonably believed the conduct was in the best interests of the Corporation;

(c) In all other cases, Indemnitee reasonably believed the conduct was at least not opposed to the best interests of the Corporation; and

(d) In the case of any criminal proceeding, Indemnitee had no reasonable cause to believe the conduct was unlawful.

Determination Procedure (§ 10-855): The required determination shall be made by:

☐ A majority vote of directors who are not parties to the Proceeding and who were directors at the time of the conduct at issue (even if less than a quorum)

☐ Special legal counsel selected by the majority of directors described above, or if such a majority cannot be obtained, selected by the full board

☐ The shareholders (excluding shares owned by or voted under control of directors who are parties to the Proceeding)

2.3 Advancement of Expenses

CLAUSE 2.3 — ADVANCEMENT OF EXPENSES

For Outside Directors (Mandatory under § 10-853): The Corporation shall pay an outside director's reasonable expenses incurred in connection with a proceeding in advance of the final disposition of such proceeding, upon receipt of:

(a) A written affirmation by the outside director of the outside director's good faith belief that the outside director has met the relevant standard of conduct; and

(b) A written undertaking by or on behalf of the outside director to repay the advance if it is ultimately determined that the outside director has not met the relevant standard of conduct or that indemnification of the outside director is otherwise prohibited.

For Other Directors (Permissive under § 10-853): The Corporation may pay a director's (other than an outside director's) reasonable expenses in advance of the final disposition of a proceeding, upon receipt of the written affirmation and written undertaking described above.

The undertaking required above need not be secured and may be accepted without reference to the financial ability of the director to make repayment.

2.4 Directors and Officers Insurance

CLAUSE 2.4 — D&O INSURANCE AUTHORIZATION

Pursuant to A.R.S. § 10-857, the Corporation may purchase and maintain insurance on behalf of an individual who is or was a director, officer, employee, or agent of the Corporation, or who, while a director, officer, employee, or agent of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, against liability asserted against or incurred by the individual in that capacity or arising from the individual's status as such, whether or not the Corporation would have the power to indemnify or advance expenses under A.R.S. §§ 10-850 through 10-858.

Minimum Coverage Parameters:

☐ Each-occurrence limit: $[________________________________]

☐ Annual aggregate limit: $[________________________________]

☐ Retention/deductible: $[________________________________]

☐ Policy form: ☐ Claims-made ☐ Occurrence

☐ Tail coverage period (if claims-made): [____] years

PART III: CONTRACTUAL INDEMNITY CLAUSE PACK

3.1 Mutual Indemnification (Balanced)

CLAUSE 3.1 — MUTUAL INDEMNIFICATION

Each party (when acting as the "Indemnifying Party") shall indemnify, defend, and hold harmless the other party and its officers, directors, employees, agents, successors, and permitted assigns (collectively, the "Indemnified Parties") from and against any and all third-party claims, demands, actions, suits, proceedings, losses, damages, liabilities, judgments, fines, penalties, costs, and expenses (including reasonable attorney fees and court costs) (collectively, "Losses") arising out of or relating to:

(a) Any material breach of any representation, warranty, or obligation of the Indemnifying Party under this Agreement;

(b) The gross negligence or willful misconduct of the Indemnifying Party or its officers, directors, employees, agents, or subcontractors;

(c) Any infringement or misappropriation of any third-party intellectual property right by the Indemnifying Party's materials, products, or services provided under this Agreement; or

(d) Any violation of applicable law by the Indemnifying Party in the performance of its obligations under this Agreement,

in each case, except to the extent such Losses arise from the negligence or willful misconduct of the Indemnified Parties or from the Indemnified Parties' breach of this Agreement.

Arizona Practice Note: Arizona follows a pure comparative fault system (A.R.S. § 12-2505). This mutual indemnification clause limits each party's obligations to Losses arising from the Indemnifying Party's own conduct, consistent with Arizona's comparative fault principles.

3.2 One-Way Indemnification (Provider to Customer)

CLAUSE 3.2 — PROVIDER INDEMNIFICATION OF CUSTOMER

Provider shall indemnify, defend, and hold harmless Customer and its officers, directors, employees, agents, successors, and permitted assigns from and against any and all Losses arising out of or relating to:

(a) Any third-party claim alleging that Customer's authorized use of Provider's products or services infringes, misappropriates, or otherwise violates any patent, copyright, trademark, trade secret, or other intellectual property right of a third party;

(b) Provider's material breach of any representation, warranty, or obligation under this Agreement;

(c) The gross negligence or willful misconduct of Provider, its employees, agents, or subcontractors; or

(d) Provider's violation of applicable law.

Exclusions from Provider's Indemnification Obligation:

Provider's obligations under this Section shall not apply to claims arising from: (i) modifications to Provider's products or services made by Customer without Provider's written approval; (ii) use of Provider's products or services in combination with third-party products, services, or materials not supplied or approved by Provider; (iii) Customer's use of Provider's products or services in violation of this Agreement or applicable law; or (iv) Customer's continued use after being notified of the alleged infringement and provided a non-infringing alternative.

Mitigation Remedies: If any product or service becomes, or in Provider's reasonable opinion is likely to become, the subject of an infringement claim, Provider may, at its sole option and expense: (1) procure for Customer the right to continue using the affected product or service; (2) replace or modify the affected product or service to make it non-infringing without material degradation in functionality; or (3) if neither (1) nor (2) is commercially practicable, terminate the affected product or service and refund to Customer any prepaid, unused fees.

3.3 Customer Indemnification (Customer to Provider)

CLAUSE 3.3 — CUSTOMER INDEMNIFICATION OF PROVIDER

Customer shall indemnify, defend, and hold harmless Provider and its officers, directors, employees, agents, successors, and permitted assigns from and against any and all Losses arising out of or relating to:

(a) Any third-party claim arising from Customer Data, including but not limited to claims of defamation, invasion of privacy, or infringement of intellectual property rights;

(b) Customer's use of Provider's products or services in violation of applicable law or this Agreement;

(c) Customer's use of Provider's products or services in combination with third-party systems, products, or materials not supplied or approved by Provider, to the extent such combination gives rise to the claim; or

(d) Customer's gross negligence or willful misconduct.

3.4 Third-Party Claims Procedure

CLAUSE 3.4 — THIRD-PARTY CLAIMS PROCEDURE

(a) Notice. The Indemnified Party shall promptly notify the Indemnifying Party in writing of any third-party claim for which indemnification is sought (a "Claim Notice"). The Claim Notice shall describe the claim in reasonable detail and include copies of any relevant pleadings, correspondence, or other documents. The failure to provide prompt notice shall not relieve the Indemnifying Party of its indemnification obligations except to the extent the Indemnifying Party is materially prejudiced by such failure.

(b) Defense. The Indemnifying Party shall have the right, at its sole cost and expense, to assume and control the defense of any claim for which it is obligated to provide indemnification, using counsel of its own choosing reasonably acceptable to the Indemnified Party. The Indemnified Party shall cooperate in all reasonable respects with the Indemnifying Party and its counsel in the defense of such claim, at the Indemnifying Party's expense.

(c) Participation. The Indemnified Party may participate in the defense of any claim with its own counsel and at its own expense; provided, however, that if the Indemnifying Party fails to assume the defense within [____] business days after receiving the Claim Notice, or if a conflict of interest makes it inappropriate for the same counsel to represent both parties, the Indemnified Party may assume the defense at the Indemnifying Party's expense.

(d) Settlement. The Indemnifying Party shall not settle any claim without the Indemnified Party's prior written consent (not to be unreasonably withheld, conditioned, or delayed) if the settlement: (i) imposes any non-monetary obligation on, or requires any admission of liability by, the Indemnified Party; (ii) does not include a complete and unconditional release of the Indemnified Party; or (iii) involves the payment of money for which the Indemnified Party will not be fully indemnified.

(e) Cooperation. The Indemnified Party shall make available to the Indemnifying Party all relevant records, documents, and information in its possession or control, and shall provide reasonable assistance and cooperation, at the Indemnifying Party's expense.

3.5 Direct Claims Between Parties

CLAUSE 3.5 — DIRECT CLAIMS PROCEDURE

(a) Notice. In the event of a direct claim, the Indemnified Party shall deliver a written notice to the Indemnifying Party specifying: (i) the nature of the claim in reasonable detail; (ii) the specific provisions of this Agreement alleged to have been breached; and (iii) the estimated amount of Losses incurred or expected to be incurred.

(b) Response. The Indemnifying Party shall respond within [____] business days, either accepting the claim (in whole or in part), rejecting the claim, or requesting additional information.

(c) Resolution. If the parties cannot resolve the direct claim within [____] business days after the Indemnifying Party's response, either party may pursue resolution through the dispute resolution mechanisms set forth in this Agreement.

PART IV: LIMITATION OF LIABILITY CLAUSES

4.1 Consequential Damages Exclusion

CLAUSE 4.1 — EXCLUSION OF CONSEQUENTIAL DAMAGES

EXCEPT FOR THE EXCLUDED CLAIMS SET FORTH IN SECTION 4.3 BELOW, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR TO ANY THIRD PARTY FOR ANY INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, PUNITIVE, OR CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT LIMITED TO LOSS OF PROFITS, LOSS OF REVENUE, LOSS OF BUSINESS OPPORTUNITIES, BUSINESS INTERRUPTION, LOSS OF DATA, LOSS OF GOODWILL, COST OF PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, OR ANY OTHER SIMILAR DAMAGES, ARISING OUT OF OR RELATING TO THIS AGREEMENT, WHETHER BASED ON WARRANTY, CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY, OR ANY OTHER LEGAL THEORY, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND EVEN IF A LIMITED REMEDY SET FORTH HEREIN IS FOUND TO HAVE FAILED OF ITS ESSENTIAL PURPOSE.

Arizona Practice Note: Arizona courts generally enforce consequential damages waivers in commercial contracts between sophisticated parties. Under Arizona's UCC (A.R.S. § 47-2719), limitation of consequential damages for personal injury in consumer goods cases is prima facie unconscionable.

4.2 Cap on Aggregate Liability

CLAUSE 4.2 — AGGREGATE LIABILITY CAP

EXCEPT FOR THE EXCLUDED CLAIMS SET FORTH IN SECTION 4.3 BELOW, EACH PARTY'S TOTAL CUMULATIVE LIABILITY ARISING OUT OF OR RELATING TO THIS AGREEMENT, WHETHER BASED ON WARRANTY, CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY, OR ANY OTHER LEGAL THEORY, SHALL NOT EXCEED:

☐ Option A (Fee-Based Cap): The aggregate amount of fees actually paid or payable by Customer to Provider during the [____]-month period immediately preceding the first event giving rise to such liability.

☐ Option B (Fixed-Dollar Cap): $[________________________________].

☐ Option C (Greater-Of Cap): The greater of (i) the aggregate amount of fees actually paid or payable by Customer to Provider during the [____]-month period immediately preceding the first event giving rise to such liability, or (ii) $[________________________________].

4.3 Carve-Outs from Liability Limitations

CLAUSE 4.3 — EXCLUDED CLAIMS

The limitations of liability set forth in Sections 4.1 and 4.2 shall not apply to (collectively, "Excluded Claims"):

(a) Either party's indemnification obligations for third-party intellectual property infringement claims;

(b) Either party's liability arising from gross negligence or willful misconduct;

(c) Either party's liability arising from a breach of its confidentiality obligations under this Agreement;

(d) Either party's liability arising from a data breach caused by such party's failure to maintain agreed-upon security controls;

(e) Customer's obligation to pay fees due and payable under this Agreement;

(f) Either party's liability arising from fraud or intentional misrepresentation; and

(g) Either party's liability arising from bodily injury, death, or damage to tangible property.

Optional Supercap for Excluded Claims:

☐ Notwithstanding the foregoing, each party's total cumulative liability for Excluded Claims shall not exceed [____] times the liability cap set forth in Section 4.2 (or $[________________________________], whichever is greater).

4.4 Enforceability Under Arizona Law

CLAUSE 4.4 — ENFORCEABILITY SAVINGS PROVISION

The parties acknowledge that the limitations of liability and exclusions of damages set forth in this Agreement reflect a fair and reasonable allocation of risk between the parties and are a material inducement for each party to enter into this Agreement. If any limitation or exclusion is found to be unenforceable under Arizona law, it shall be reformed to the minimum extent necessary to make it enforceable, and the remaining provisions shall remain in full force and effect.

Arizona Enforceability Notes:

• Arizona courts enforce contractual limitation of liability provisions between sophisticated commercial parties.
• Exculpatory clauses are valid in Arizona when they do not violate statute or public policy and are not unconscionable (Phelps v. Firebird Raceway, Inc., 210 Ariz. 403 (2005)).
• Limitations of liability for willful misconduct, fraud, or intentional torts may be void as against public policy.
• Arizona follows a comparative fault system (A.R.S. § 12-2505), which allocates fault among all parties and may affect indemnification dynamics.

PART V: ANTI-INDEMNITY CONSIDERATIONS

5.1 Construction Anti-Indemnity Statute (A.R.S. § 34-226)

Arizona Revised Statutes § 34-226 is a comprehensive anti-indemnity statute that applies to construction contracts and design professional services contracts. It is preemptive at the state level, meaning counties, cities, towns, or other political subdivisions may not impose additional regulations.

Key provisions of A.R.S. § 34-226:

(a) Public Building/Improvement Contracts — General Rule (Void Provisions):

Except as provided in subsection (b), a construction contract or subcontract or design professional services contract or subcontract entered into in connection with a public building or improvement shall not require that the contractor, subcontractor, or design professional defend, indemnify, insure, or hold harmless the contracting agent from any liability, damage, loss, claim, action, or proceeding. Any contract provision that is not permitted by subsection (b) is against public policy and is void.

(b) Permitted Indemnification (Public Contracts):

A contracting agent may require that a contractor, subcontractor, or design professional indemnify and hold harmless the agent, and its officers and employees, from liabilities, damages, losses, and costs, including reasonable attorney fees and court costs, but only to the extent caused by the negligence, recklessness, or intentional wrongful conduct of such contractor, subcontractor, or design professional, and only to the extent that the negligence, recklessness, or intentional wrongful conduct of the contractor, subcontractor, or design professional is determined to have caused the losses in a comparative fault proceeding.

(c) Private Contracts:

For private construction and design professional services contracts, similar restrictions apply. A construction contract or design professional services contract shall not require a contractor, subcontractor, or design professional to defend, indemnify, insure, or hold harmless the other contracting party against liability for bodily injury, death, or property damage caused by the negligence or fault of the other contracting party.

5.2 Architect-Engineer Dwelling Contract Restrictions (A.R.S. § 32-1159.01)

A.R.S. § 32-1159.01 voids indemnity agreements in construction and architect-engineer dwelling contracts that purport to indemnify the promisee against liability for damages for personal injury or property damage caused by or resulting from the negligence of the promisee, the promisee's agents, or the promisee's employees.

5.3 Construction Contract Indemnity Clause (A.R.S. § 34-226-Compliant)

CLAUSE 5.3 — CONSTRUCTION INDEMNITY (COMPLIANT WITH A.R.S. § 34-226)

(a) Public Projects: To the maximum extent permitted by A.R.S. § 34-226, Contractor shall indemnify, defend, and hold harmless Owner and its officers, directors, employees, and agents from and against any and all Losses arising out of or relating to bodily injury (including death), property damage, or any other loss, damage, or expense, but only to the extent caused by the negligence, recklessness, or intentional wrongful conduct of Contractor, its subcontractors, agents, or employees, and only to the extent that such fault is determined in accordance with Arizona's comparative fault principles (A.R.S. § 12-2505).

(b) Private Projects: To the maximum extent permitted by A.R.S. § 34-226, Contractor shall indemnify, defend, and hold harmless Owner and its officers, directors, employees, and agents from and against any and all Losses arising out of or relating to bodily injury (including death), property damage, or any other loss, damage, or expense, but only to the extent caused by the negligent acts, errors, or omissions of Contractor, its subcontractors, agents, or employees, and not to the extent caused by the negligence or fault of Owner.

IMPORTANT: A.R.S. § 34-226 prohibits requiring a contractor, subcontractor, or design professional to indemnify or hold harmless the other contracting party against liability caused by the negligence or fault of that other party. Any provision that violates this restriction is void and unenforceable.

5.4 State Preemption

A.R.S. § 34-226(A) expressly provides that the regulation and use of indemnity agreements in construction and design professional services contracts are of statewide concern, and their use is not subject to further regulation by a county, city, town, or other political subdivision of Arizona. This preemption applies to all construction and design professional services contracts, whether public or private.

PART VI: INSURANCE REQUIREMENTS

6.1 General Insurance Requirements

CLAUSE 6.1 — INSURANCE REQUIREMENTS

[________________________________] ("Insured Party") shall, at its sole cost and expense, obtain and maintain throughout the term of this Agreement, and for a period of [____] years thereafter, the following insurance coverages with carriers rated no less than "A-" (VII) by A.M. Best Company:

(a) Commercial General Liability Insurance:

☐ Each-occurrence limit: $[________________________________]

☐ General aggregate limit: $[________________________________]

☐ Products-completed operations aggregate: $[________________________________]

☐ Personal and advertising injury: $[________________________________]

Coverage shall include premises-operations, products-completed operations, contractual liability, broad form property damage, and independent contractors.

(b) Professional Liability (Errors and Omissions) Insurance:

☐ Each-claim limit: $[________________________________]

☐ Annual aggregate limit: $[________________________________]

☐ Retroactive date: No later than [__/__/____]

(c) Workers' Compensation and Employers' Liability Insurance:

☐ Workers' Compensation: Statutory limits as required by Arizona law (A.R.S. § 23-901 et seq.)

☐ Employers' Liability:
- Each accident: $[________________________________]
- Disease — policy limit: $[________________________________]
- Disease — each employee: $[________________________________]

(d) Commercial Automobile Liability Insurance:

☐ Combined single limit: $[________________________________]

Coverage shall include owned, hired, and non-owned vehicles.

(e) Umbrella/Excess Liability Insurance:

☐ Each-occurrence limit: $[________________________________]

☐ Annual aggregate limit: $[________________________________]

6.2 Additional Insured Requirements

CLAUSE 6.2 — ADDITIONAL INSURED

[________________________________] ("Additional Insured") shall be named as an additional insured on all commercial general liability, commercial automobile liability, and umbrella/excess liability insurance policies maintained by [________________________________] ("Named Insured") under this Agreement, using ISO Additional Insured endorsement CG 20 10 (or equivalent) for ongoing operations and CG 20 37 (or equivalent) for completed operations.

The additional insured coverage shall:

(a) Be primary and non-contributory with respect to any other insurance or self-insurance maintained by the Additional Insured;

(b) Apply on a per-project basis, where applicable;

(c) Include a waiver of subrogation in favor of the Additional Insured; and

(d) Not be limited by any limitation of liability set forth in this Agreement.

Arizona Practice Note: A.R.S. § 34-226 restrictions on construction indemnity do not apply to insurance obligations. The statute's limits on indemnification are separate from the ability to require additional insured status on insurance policies.

6.3 Waiver of Subrogation

CLAUSE 6.3 — WAIVER OF SUBROGATION

Each party shall cause its insurers to waive all rights of subrogation against the other party and its officers, directors, employees, and agents with respect to any claims covered by the insurance policies required under this Agreement.

6.4 Certificates of Insurance

CLAUSE 6.4 — CERTIFICATES AND EVIDENCE OF INSURANCE

[________________________________] shall deliver to [________________________________] certificates of insurance evidencing all required coverages prior to the commencement of any work or services under this Agreement, and annually thereafter upon renewal. Certificates shall:

(a) Identify the named insured, policy numbers, policy periods, and coverage limits;

(b) Confirm additional insured status, waiver of subrogation, and primary/non-contributory status;

(c) Provide that the insurer shall endeavor to provide [____] days' prior written notice to the certificate holder of any cancellation, non-renewal, or material change in coverage; and

(d) Be accompanied by copies of all required endorsements upon request.

PART VII: ARIZONA-SPECIFIC PRACTICE NOTES

7.1 Comparative Fault System

Arizona follows a pure comparative fault system under A.R.S. § 12-2505. Under this system:

• The trier of fact allocates the percentage of fault to each party, including the plaintiff.
• A plaintiff's recovery is reduced by the percentage of fault attributed to the plaintiff.
• A plaintiff may recover even if the plaintiff's fault exceeds that of the defendant.
• Arizona has abolished joint and several liability for most claims (A.R.S. § 12-2506); each defendant is liable only for the percentage of the damages for which that defendant is responsible, except in limited circumstances.

7.2 Several Liability

Under A.R.S. § 12-2506, in any action for personal injury, property damage, or wrongful death, each defendant is liable only for the amount of damages allocated to that defendant in direct proportion to that defendant's percentage of fault. Joint and several liability is abolished except for:

• Defendants who act in concert
• Defendants whose relationship to each other would otherwise make one liable for the other's acts
• A party against whom a judgment is sought by an employer for any portion of damages the employer paid

This several-only liability system means indemnification provisions are particularly important in Arizona, as a defendant may not be able to recover from co-defendants under tort law theories.

7.3 Statute of Limitations Considerations

• Written contract claims: Six (6) years (A.R.S. § 12-548)
• Oral contract claims: Three (3) years (A.R.S. § 12-543)
• Tort claims (general): Two (2) years (A.R.S. § 12-542)
• Construction defect claims: Subject to the statute of repose — eight (8) years from substantial completion for actions against design professionals, construction contractors, material suppliers, and others (A.R.S. § 12-552)

7.4 Jury Waiver Enforceability

The Arizona Constitution (Art. II, § 23) preserves the right to trial by jury. Arizona courts may enforce pre-dispute jury waivers in commercial contracts if the waiver is knowing, voluntary, and intelligent. Practitioners should:

☐ Include conspicuous placement of the waiver (capitalized, bold, or separate acknowledgment)

☐ Ensure the waiver is mutual

☐ Consider alternative dispute resolution (arbitration under the Arizona Revised Uniform Arbitration Act, A.R.S. § 12-3001 et seq.) as an alternative to jury waiver

7.5 Drafting Checklist

☐ Verify that all construction contract indemnification provisions comply with A.R.S. § 34-226

☐ Distinguish between public and private construction projects (A.R.S. § 34-226 has separate provisions)

☐ Confirm that design professional services contracts comply with A.R.S. § 32-1159.01

☐ Ensure indemnification provisions are consistent with Arizona's comparative fault system (A.R.S. § 12-2505)

☐ Verify that corporate indemnification provisions comply with A.R.S. §§ 10-850 through 10-858

☐ Verify insurance requirements meet Arizona-specific minimums (including Arizona Workers' Compensation under A.R.S. § 23-901 et seq.)

☐ Include appropriate survival provisions for post-termination indemnification obligations

☐ Verify that advancement of expenses provisions for outside directors include the mandatory advancement required by § 10-853

☐ Consider Arizona's several-only liability system when structuring indemnification and contribution rights

☐ Ensure all optional provisions are appropriately selected and all bracketed fields are completed

SOURCES AND REFERENCES

1. A.R.S. §§ 10-850 through 10-858 — Arizona Corporations, Indemnification (Article 5)
   - https://www.azleg.gov/arsDetail/?title=10

2. A.R.S. § 10-851 — Authority to Indemnify
   - https://law.justia.com/codes/arizona/2016/title-10/section-10-851

3. A.R.S. § 10-852 — Mandatory Indemnification
   - https://law.justia.com/codes/arizona/2015/title-10/section-10-852

4. A.R.S. § 34-226 — Anti-Indemnity Statute (Construction and Design Professional Services)
   - https://www.azleg.gov/ars/34/00226.htm

5. A.R.S. § 32-1159.01 — Indemnity Agreements in Construction and Architect-Engineer Dwelling Contracts Void
   - https://www.azleg.gov/ars/32/01159-01.htm

6. A.R.S. § 12-2505 — Comparative Fault
   - https://law.justia.com/codes/arizona/title-12/

7. A.R.S. § 12-2506 — Several Liability; Allocation of Fault
   - https://law.justia.com/codes/arizona/title-12/

8. A.R.S. § 12-548 — Statute of Limitations (Written Contracts)
   - https://law.justia.com/codes/arizona/title-12/

9. A.R.S. § 12-552 — Statute of Repose (Construction)
   - https://law.justia.com/codes/arizona/title-12/

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