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“Terms and Conditions” In Bid Document Do Not Constitute Binding Agreement

March 3, 2009

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In <i>Illinois Nat. Ins. Co. v. American Alternative Ins. Corp</i>., the School Construction Authority of the City of New York and its insurer brought an action against a subcontractor's insurer, seeking defense and indemnification for an underlying personal injury lawsuit. The insurance contract issued by the subcontractor's insurer included as an insured “any person or organization for whom you are performing operations when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy.” The plaintiffs conceded that the subcontractor's contract with SCA did not contain an agreement that SCA be named as additional insureds. The plaintiffs, however, argued that a provision in the bid documents stated that the performance of work “shall be governed by” certain terms and conditions, among which was a requirement to name SCA as an additional insured. As such, the plaintiffs argued that this constituted an “agreement” in writing satisfying the additional insured provision of the subcontractor's insurance contract. The First Department disagreed and affirmed the lower court’s decision dismissing the plaintiffs’ claims.
Thanks to Cheryl Fuchs for her contribution to this post.

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