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Handling client contract negotiations

This is directed to anyone here who works as an independent contractor.

How do you handle the situation where the client wants you to sign some ponderous pile of rubbish that is utterly one-sided?

I have in hand possible contract work: a short term remote project amounting to $5K or less.

One one hand I could just sign whatever crap they present me with, under the assumption that they are a small niche player with limited funds located a long distance away, and not worry about it. However, "stuff happens", and I don't like leaving bread crumbs of careless dealings around.

Among the many pleasantries in this company's contract:

Indemnification.  Contractor shall defend and/or indemnify and hold harmless the Corporation from and against any claim and damage resulting from any such act or failure to act by Contractor in excess of or contrary to the Corporation's instruction or normal and ordinary business practices of similarly situated individuals.  In addition, Contractor shall indemnify and hold the Corporation harmless against any liability for damages or other claims, including reasonable legal expenses and costs incurred by the Corporation, with respect to any alleged violations of Contractor's duties to the Corporation as outlined in this Agreement.  All costs incurred by the Corporation with respect to any such claims shall be promptly reimbursed by Contractor within fifteen (15) days after receipt of an invoice from the Corporation.

I have *NEVER* been asked to assume liabilities for a client!!

Do any of you indys even bother with clients that push off language like this? I've already had two go rounds with them and they are clinging to this repulsive clause like a Rottweiler...

Bored Bystander
Sunday, August 1, 2004

Not worth the risk.

Sunday, August 1, 2004

Bored, definitely dodgy. It should be the other way around. The corporation (employer) is normally the one that indemnifies the employee.

Sometimes this type of language is a carry-over where corporations are used to dealing with BIG "contractors," such as where they pay $5 million to get something done.

This is particularly prevalent when dealing with government, but of course that's also where the danger comes, because citizens are forever complaining about the way a government department exercised its responsibilities, and in many cases demanding compensation.

Increase the contract fee to $500,000 or walk.

Inside Job
Sunday, August 1, 2004

Signing something like this is basically inviting a lawsuit. It may not hold up in court, but there will be legal fees if they sue you.
Sunday, August 1, 2004

Black out that stuff and sign it. It's better to cover your bases in case something happens.

Tom Vu
Sunday, August 1, 2004

Sounds risky. How well do you know the client? If it's a remote development job then I suspect not particularly well.

That being the case, politely pass on their contract. Something better will come along.

Sunday, August 1, 2004

I received a contract with that type of language in it last year. I replaced it with the following and they accepted my changes:

Anything herein to the contrary notwithstanding, Contractor’s aggregate liability from any and all causes related to the subject matter of this Agreement shall be limited to money damages directly and proximately caused by Contractor in an amount not to exceed, as applicable, the amount paid by <my client> for the particular Services that are the subject of the claim, except for damages caused by the gross negligence or willful and intentional acts of the contractor. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR SPECIAL, INCIDENTAL, INDIRECT, CONSEQUENTIAL OR SIMILAR DAMAGES, INCLUDING BUT NOT LIMITED TO LOSS OF DATA, INCOME OR PROFITS,  EVEN IF IT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.  No action arising out of this Agreement may be brought by Either party more than two (2) years after the cause of action has accrued or two (2) years after the termination of the this Agreement, whichever is earlier.

Basically, it would take running someone down in my car on purpose for me to lose on this one.

Mark Wilson
Sunday, August 1, 2004

Perhaps overly simplistic but... since it's a negotiation simply put a price on it and let them take it out if the price is unacceptable :-)

Sunday, August 1, 2004

This isn't a good place to ask legal advice. If the work isn't worth having the contract reviewed by a lawyer then walk away.

That said (and the obligatory IMNAL), as I read it all they want you to sign is that they are not responsible for something you do without their direction, nor are they responsible for you not doing something they directed you to. It sounds reasonable to me, they're not responsible for your screw-ups; just make sure you get the requirements in writing and only do what's written.

Anony Coward
Sunday, August 1, 2004

Seems to me that you should NEVER be responsible for more damages $$ than they paid you.

That limits your risk.

And why take a job for $x  if you could be on the hook for $100x

Sunday, August 1, 2004

Guys, thanks for the *OPINIONS* which I take as such!

I wasn't asking legal advice, merely making sure that my eyes weren't deceiving me and that I was not amplifying the meaning of this paragraph. It appears that I wasn't.  It goes.

Bored Bystander
Sunday, August 1, 2004

Why are they giving you a contract?  Why aren't you telling them what your firm's contract will be if they decide to engage its services?

Chris Hanson
Monday, August 2, 2004

Sounds like you should have PI (Professional Indemnity) insurance for this contract, if you don't already have it.

It is fine to be liable for more than they will pay you, as PI cover is in place.

The problem with the quote that you provided is that they seem to expect that you hold *unlimited* PI cover. There is no such thing. You can get $1m cover quite cheaply, or $10m more expensively, possibly $100m in the specialist market (e.g. Lloyd's), but unlimited cover is not possible.

In my case, I have a contract where the limit is $1m and that was fine, even when the contract price was less than that. It has subsequently been extended, so the price is over a $1m, but the limit remains. The point is, that the limit should not be related to the contract price (there may be a loose correlation, but no more).

In your case, potentially unlimited downside for only $5k upside, even assuming they pay you in full, seems like a dubious honour, to say the least.

Unless you really need that cash, tell them to take the clause out or walk, your choice.

Monday, August 2, 2004

Chris Hanson: "Why are they giving you a contract?  Why aren't you telling them what your firm's contract will be if they decide to engage its services?".

This is a very good point. As a supplier you should have a set of standard Terms and Conditions, although I accept that some clients will not accept this, for the same reasons as you shouldn't accept theirs.

Monday, August 2, 2004

Not for 5K

Monday, August 2, 2004

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