When someone is hurt because of a building service or maintenance contractor's careless work, one of the first moves the contractor or its insurer makes is to point to the service agreement. Buried somewhere in that document is language designed to eliminate the contractor's legal responsibility before anyone got hurt: clauses like "contractor shall not be liable for any injury arising from its services" or "owner assumes all risk associated with contractor's operations." Injured people are told that clause settles the matter. It rarely does because New York General Obligations Law (GOB) § 5-323 says otherwise. Understanding exactly how the statute works, and how the contractor's insurer will try to use that contract against you anyway, is what this article covers.
In This Article
Understanding GOB § 5-323
GOB § 5-323 covers contracts for building service and maintenance work: commercial cleaning and janitorial services, security and alarm monitoring, elevator maintenance, HVAC, plumbing and electrical maintenance retainers, window washing, landscaping, pest control, fire suppression system inspections, and any arrangement under which a contractor is engaged to maintain the physical condition, safety, or operation of a building. The common thread is that the contractor was hired to keep a building or its systems safe and functional.
An injured person does not need to have entered into a service contract for this law to apply. The contract was between the building owner or property manager and the contractor. The injured person was not at the table when it was signed. Tenants, guests, visitors, delivery workers, and anyone else hurt by careless building service work is protected by this statute regardless of whether their name appears anywhere in the agreement.
What A Liability Clause Is Trying to Do
A liability exemption clause is a contract provision written before any injury occurs that tries to eliminate one party's legal responsibility for future harm. In a building service or maintenance agreement, it is drafted by the contractor and designed for one purpose: if the contractor's careless work hurts someone, the contractor wants a document it can point to in court that makes the case go away. The clause is not a sharing of risk. It is an attempt to transfer the entire consequence of the contractor's own negligence onto the injured person. Some provisions are blunt: "Contractor shall have no liability for any injury arising out of the performance of services under this agreement." Others flow liability in the wrong direction: "Owner shall indemnify and hold harmless Contractor from any and all claims arising from Contractor's work on the premises." Still others dress it up with qualifying language: "To the fullest extent permitted by law, Contractor shall bear no responsibility for negligent acts or omissions in the course of service." All of them have the same goal in mind.
When the contractor claims it has no liability under the contract, it is not saying someone else was responsible for the injury. It is saying that no one is financially responsible regardless of cause. If the clause held up, the injured person would be left with a legitimate negligence claim and no defendant with a legal obligation to pay it.
How Contractors Use the Contract Against Injured People
When someone is injured by a building service or maintenance contractor and a claim is filed, the contractor's insurer typically follows a predictable approach. At the claim stage, they deny liability by citing the service contract as if the clause were dispositive, knowing that many injured people accept the denial and walk away. They request extensive documentation to delay any acknowledgment of responsibility. They make lowball settlement offers that treat the contract language as creating legal uncertainty about liability even when GOB § 5-323 forecloses that uncertainty. The clause is not a legal argument. It is a negotiating tactic designed to work on people who do not know the law.
When a service contract contains both an exemption clause and an insurance requirement, both need to be evaluated together. The coverage questions that matter are whether the required insurance was procured, whether it reaches the specific injury, and which carrier is responsible for the risk. Those answers determine who pays and how much, which is often more consequential than the text of the exemption clause itself.
When an insurer denies a claim or offers a fraction of its value by citing a service contract clause, that denial may have no legal basis. An injured person who does not know this accepts far less than the claim is worth. That outcome is not accidental. It is the strategy.
Why A Liability Clause Cannot Bar an Injury Claim
GOB § 5-323 states plainly that any agreement in connection with a building service or maintenance contract that purports to exempt a contractor from liability for injuries caused by its own negligence is void as against public policy and wholly unenforceable. The legislature did not leave room for a better-worded version of the same clause to survive. If the practical effect of the language is to shield the contractor from the consequences of its own careless work, it does not matter how that language is drafted. It fails.
Courts enforce this rule by looking at substance, not surface. The contractor's insurer will often point to carefully worded clauses and argue they comply with the law. Courts consistently reject this argument. A clause reading "to the fullest extent permitted by applicable law, Contractor shall not be liable for any claims arising from its performance of services" is still void to the extent it purports to cover the contractor's own negligence, because the qualifying phrase does not expand what the law permits. It just describes the statute's operation while attempting to achieve the same exemption through softer language. Adding "except as required by law" does not cure the defect. Courts consistently see through this. If a sweeping exemption cannot be separated from the lawful portions of the clause, the court strikes it entirely. If lawful provisions can be severed, only the unlawful exemption goes.
What A Contractor Can Still Rely On
However, not every provision in a building service contract is void. Clauses that require the contractor to carry liability insurance, maintain minimum policy limits, or name the building owner as an additional insured are fully enforceable. They are not exemptions from liability; they are financial backstops for when liability is established. If the contractor carried the required coverage, an injured person's recovery comes from that policy. That is the system working as intended.
Where both the contractor and the building owner contributed to the unsafe condition that caused an injury, a contract provision describing how they divide the costs of a judgment or settlement between themselves does not affect the injured person's right to be made whole. The defendants may agree to split liability fifty-fifty or require one to indemnify the other based on relative fault. That is a dispute between them. The injured person's right to recover from either or both, based on their actual negligence, is separate and not diminished by how they arranged to share liability.
The line is drawn at the contractor's own fault. A clause requiring the contractor to carry liability coverage and name the owner as an additional insured survives because it does not eliminate liability; it ensures coverage exists to pay it. A clause addressing the owner's independent fault does not shield the contractor if the contractor's own negligence caused the injury. On the contractor's own negligence, the contract offers nothing.
Landmark New York Case Under GOB § 5-323
Melodee Lane Lingerie v. American District Telegraph
Melodee Lane is where the Court of Appeals in 1966 first confronted the core problem this statute was built to solve. The American District Telegraph Company provided burglar alarm and fire protection services to a New York City lingerie store. When a fire destroyed the premises, the store sued for the alarm company's failure to provide adequate monitoring. The service contract contained a clause limiting the company's liability to a nominal sum, regardless of what its negligence cost. The Court of Appeals examined whether a contractor hired specifically to protect people and property could use a contract clause to avoid meaningful liability for failing to do exactly that. The decision identified the public policy problem directly: a contractor performing protective services should not be able to disclaim responsibility for the precise harm those services were hired to prevent. Melodee Lane became the foundation for the legislative action that resulted in GOB § 5-323, and its logic applies whenever an insurer points to a limiting clause in a building service agreement after the contractor's negligence caused an injury.
Contact Sternberg Injury Law Firm
Understanding how GOB § 5-323 operates is critical for any injured person who has been told that a service contract clause bars their claim. The statute does meaningful work, but it does not apply itself. It requires an attorney who can identify the relevant exemption language, evaluate whether the clause is void under the statute, locate the applicable insurance coverage, and press the claim through to resolution. The right answer is almost never the one the contractor's insurer put in its denial letter.
The personal injury attorneys at Sternberg Injury Law Firm have handled premises liability and contractor negligence matters in both residential and commercial settings. We can review the service agreement, identify which provisions are void and which remain enforceable, locate the applicable insurance coverage, and pursue the claim through to resolution. We offer free consultations at a location of your convenience. Our team can converse in many languages including Creole, Hindi, Russian, Spanish, Urdu, Uzbek, and Yiddish.
GOB § 5-323 Frequently Asked Questions
No. GOB § 5-323 declares any such waiver void as against public policy. The contractor's responsibility for injuries caused by its own negligence cannot be eliminated through a service agreement, regardless of how the clause is worded.
Courts look at the functional effect of the clause, not its surface language. A provision that operates to eliminate the contractor's liability for its own negligent acts is void, regardless of qualifying phrases like "to the fullest extent permitted by law" or "except as required by applicable statute." Those qualifiers describe the result without curing the defect.
The contractor and the building owner may have a valid agreement about how to divide the cost of a claim between themselves based on their respective fault. That arrangement does not affect an injured person's right to recover from either or both of them. What the statute prohibits is reducing the contractor's share to zero. How the defendants apportion liability between themselves is a matter for them to resolve.
If the property management company was performing building service or maintenance functions, such as conducting inspections, overseeing repairs, or supervising cleaning crews, the statute applies to any attempt to exempt the manager from liability for negligence in those functions. Courts look at what the management company did, not what title it holds in the agreement.
Insurance does not validate an exemption clause, but it does determine where an injured person's recovery comes from. When the contractor was required to carry liability coverage and did, the claim is paid through that policy. The exemption clause cannot be used to avoid triggering that coverage. Whether the required insurance was actually procured, and whether it covers the specific injury at issue, is often the most important practical question in these cases.