Opinion ID: 2076945
Heading Depth: 4
Heading Rank: 2

Heading: Transfer of Statutory Liability

Text: [¶ 41] Scandent and Koshy argue that we should not enforce the indemnification agreement because it impermissibly transfers statutory liability to a party who does not share that liability. Cf. ELRAC, Inc. v. Ward, 96 N.Y.2d 58, 724 N.Y.S.2d 692, 748 N.E.2d 1, 6-7 (2001) (holding that indemnification agreements in vehicle rental agreements are enforceable only for amounts exceeding the state's statutory minimum financial responsibility limits). We will not enforce a contract if it is illegal, contrary to public policy, or contravenes the positive legislation of the state. Bureau of Me. State Police v. Pratt, 568 A.2d 501, 505 (Me.1989). [¶ 42] A contract is unenforceable as violating public policy in Maine only if it violates a well-defined and dominant policy that may be ascertained from the law and legal precedent. Id. at 505-06; see also Court v. Kiesman, 2004 ME 72, ¶ 11, 850 A.2d 330, 333 (A contract is against public policy if it clearly appears to be in violation of some well established rule of law, or that its tendency will be harmful to the interests of society. (quotation marks omitted)). To determine whether a contract violates public policy, we balance the freedom of the parties to contract against the detriment to society that would result from enforcement of that contract. Court, 2004 ME 72, ¶ 11, 850 A.2d at 333. [¶ 43] By statute, the Legislature has provided for joint and several, vicarious liability on the part of a vehicle owner in the business of renting vehicles either (1) with a renter who is negligent, or (2) with a person who operates the vehicle with the renter's permission and is negligent. 29-A M.R.S. § 1652. Because we have concluded that the statute does not impose liability on a renter for the negligence of a driver operating with that renter's permission, the question now before us is whether an indemnification agreement that transfers statutory liability to a party who is not otherwise liable, directly or vicariously, is unenforceable because it contravenes the positive legislation of the state. [9] [¶ 44] Although the statute does not place liability on the renter when the renter is not negligent, nothing in the statute precludes the renter and the owner rental business from contracting for the renter to indemnify the owner for that liability. See Court, 2004 ME 72, ¶ 12, 850 A.2d at 333 (recognizing that parties have considerable latitude in their freedom to contract); Allstate Ins. Co. v. Elwell, 513 A.2d 269, 272 (Me.1986) (acknowledging the freedom to contract and stating that contracts are not lightly set aside). The statutory purpose to ensure compensation for injured third parties, see Piche, 2005 WL 2428156, at -6, 2005 U.S. Dist. Lexis 22275, at -14, is satisfied by Enterprise's payment to those parties. This statutory purpose has therefore been served, whether or not Enterprise is later indemnified by the vehicle's renter, or by any other person for that matter. In these circumstances, the detriment to society is not so great as to overwhelm the freedom of parties to contract. See Court, 2004 ME 72, ¶ 11, 850 A.2d at 333. Thus, the indemnification provisions of the rental agreement are not illegal, do not violate positive legislation, and, because the contract language provides for indemnification after Enterprise has paid the injured parties, are not against Maine's public policy.