Excessive contractual obligations Excessive contractual obligations
Page 1 of 2 12 LastLast
Posts 1 to 10 of 15
  1. #1

    Default Excessive contractual obligations

    Hello all,

    I’d be interested to know others’ views on some proposed contract terms -

    I am the sole director of a limited company through which I provide IT services as per a normal contractor model. A new client has presented me a contract with the usual definitions i.e. the client is ‘The Client’, the ltd company is ‘The Consultancy’ and I (or a substitute) would be ‘The Worker’.

    The contract explicitly states that all of the terms of the contract are not only direct undertakings and agreements between the Client and the Consultancy but also between the Client and the Worker.

    Should the Consultancy fail to be able to provide services or meet obligations, all terms of the agreement transfer from the Consultancy to the Worker, including indemnities, which actually could extend beyond the required £1M PI Insurance; any shortfall being made up from the private resources of the Consultancy/Worker.

    My limited company has PI Insurance but I have never heard of a Client/Consultancy agreement imposing all terms of the contract on the Worker as well. Also, I’d imagine this would make providing a substitute impossible in any practical sense.

    Has anyone come across anything similar where a consultancy agreement requires the actual Workers, in addition to the Consultancy, to bind themselves personally to all terms of the Agreement?

    All best!

  2. #2

    Respect my authoritah!

    NotAllThere's Avatar
    Join Date
    Aug 2007
    Location
    Far away from HMRC
    Posts
    23,694

    Default

    It's a contract. You haven't signed it. Negotiate. Expecting the limited liability of your company to be swept aside is a step too far. I'd tell them to stick it. (Politely draw their attention to the fact that it's not possible for you to sign that clause, and if they insist, then, reluctantly, you'll have to walk away and they'll have to find someone equally qualified but more stupid).
    Down with racism. Long live miscegenation!

  3. #3

    bored now

    eek's Avatar
    Join Date
    Jun 2010
    Location
    😂
    Posts
    26,274

    Default

    You want a lawyer to check it and get all offending clauses removed but I would be running away from that contract as rapidly as I could - if the consultancy is pulling tricks like this in the contract what is working for them like?
    merely at clientco for the entertainment

  4. #4

    Contractor Among Contractors

    Cirrus's Avatar
    Join Date
    Oct 2015
    Location
    Rural Rutland
    Posts
    1,277

    Default

    Quote Originally Posted by ThisIsNotNormal View Post
    Has anyone come across anything similar where a consultancy agreement requires the actual Workers, in addition to the Consultancy, to bind themselves personally to all terms of the Agreement?
    Yes.

    I first saw these 30 years ago. I've assumed all contracts are like that but don't remember checking recently.

    The problem here is the company signs the contract but the company is not a trustworthy partner. If anything goes wrong the contractor can make the company bankrupt. So to make the contract have any teeth it needs to target an entity that can't just walk off.
    "Don't part with your illusions; when they are gone you may still exist, but you have ceased to live" Mark Twain

  5. #5

    Default

    Quote Originally Posted by NotAllThere View Post
    It's a contract. You haven't signed it. Negotiate. Expecting the limited liability of your company to be swept aside is a step too far. I'd tell them to stick it. (Politely draw their attention to the fact that it's not possible for you to sign that clause, and if they insist, then, reluctantly, you'll have to walk away and they'll have to find someone equally qualified but more stupid).
    Thanks for the reply! Agree that contracting out of the protections of the limited company would not be sensible (although the financial risk could potentially be mitigated with a second PI policy). It is just not something I would do although I can see their intention is to de-risk their side.

  6. #6

    Default

    Quote Originally Posted by eek View Post
    You want a lawyer to check it and get all offending clauses removed but I would be running away from that contract as rapidly as I could - if the consultancy is pulling tricks like this in the contract what is working for them like?
    This one would is direct to client (my ltd is the Consultancy) but yes, not favourable terms and should I supply a substitute, what worker would want to take on that risk!

  7. #7

    bored now

    eek's Avatar
    Join Date
    Jun 2010
    Location
    😂
    Posts
    26,274

    Default

    Quote Originally Posted by ThisIsNotNormal View Post
    This one would is direct to client (my ltd is the Consultancy) but yes, not favourable terms and should I supply a substitute, what worker would want to take on that risk!
    How could you provide a substitute with that clause in it? I would argue it destroyed any other RoS clause within the contract.
    merely at clientco for the entertainment

  8. #8

    Default

    Quote Originally Posted by Cirrus View Post
    Yes.

    I first saw these 30 years ago. I've assumed all contracts are like that but don't remember checking recently.

    The problem here is the company signs the contract but the company is not a trustworthy partner. If anything goes wrong the contractor can make the company bankrupt. So to make the contract have any teeth it needs to target an entity that can't just walk off.
    Hi, I think I am lucky then to have avoided such terms up to now & I do get what you mean. It just muddies the waters; if the entire contract for services flips (for any reason) from the consultancy to the worker then it strips out one of the main reasons to trade through a ltd company.

  9. #9

    Double Godlike!


    Join Date
    Sep 2014
    Location
    Work-life balance nirvana
    Posts
    12,158

    Default

    Quote Originally Posted by eek View Post
    How could you provide a substitute with that clause in it? I would argue it destroyed any other RoS clause within the contract.
    Ey up, Lionel Hutz is in.

    I'd whizz the contract straight off to QDOS and see what they make of it.
    The greatest trick the devil ever pulled was convincing the world that he didn't exist

  10. #10

    bored now

    eek's Avatar
    Join Date
    Jun 2010
    Location
    😂
    Posts
    26,274

    Default

    Quote Originally Posted by LondonManc View Post
    Ey up, Lionel Hutz is in.

    I'd whizz the contract straight off to QDOS and see what they make of it.
    I seem to remember suggesting a lawyer in my very first post. That one was just to encourage the OP to do so...
    merely at clientco for the entertainment

Tags for this Thread

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •