liability - mention maximum in contract

[Ulukai]

Hello,

I just registered here because I just started working with a UK agency for the first time and google brought me to this interesting forum

I was wondering if it is common for UK agents to mention a maximum number in the contract for which you can be held liable.

Most freelancers in Europe that I know make a deal with the company they contract for to either not be liable at all, or only liable up to a certain amount.

I'm working through a UK agent now for the first time. But in the contract, it is stated that I agree to indemnify the agency for any and all loss and that I am fully responsible for any and all losses, actions, claims and liabilities.

The contract also states that I am obliged to have a professional indemnity insurance up to 500000 pounds per claim.

A friend of mine is working through another UK agency and has liability clauses similar to the ones that are mentioned in mine. This led me to believe that these clauses are pretty standard in the UK.

What bothers me about this is that although it is stated that I am obliged have an insurance cover for 500000 pounds, it is not stated that my professional liability is actually limited to 500000 pounds.

When I asked the agent about this, I was told not to worry, that they have their own Professional indemnity Insurance, but for it to be valid, I just need to get one myself for 500000 pounds.

So I got the insurance for up to 500000 pounds for professional indemnity.

But when I read what is really said in the contract, the way I understand it is that I am liable indefinitely. The 500000 pounds insurance that I have would be worthless if I would get a claim for 2000000 pounds for example.

Do you think that I am correct with my assumption of being liable indefinitely?

I would like to ask the agent to explicitly put a maximum number in the contract for which I can be held liable, for example a statement like this:

The consultancy can be held liable for any and all losses, actions, claims and liabilities only up to a maximum of 500000 pounds.

Is asking something like this acceptable and/or common when working with an agency in the UK?

[SueEllen]

I always get the agents to put my contact that my company is liable for £x amount of insurance.

I also get them to remove the fact that I'm personally liable as I personally don't have the insurance/the money but the company does.

Some agencies will fight you on this. Others are fine. With the ones that fight you point out if you are personally bankrupted due to their claim then they don't get any money from you or your company.

[tractor]

...

I always get the agents to put my contact that my company is liable for £x amount of insurance.

I also get them to remove the fact that I'm personally liable as I personally don't have the insurance/the money but the company does.

Some agencies will fight you on this. Others are fine. With the ones that fight you point out if you are personally bankrupted due to their claim then they don't get any money from you or your company.

Exactly. There is a trend running through the agents at the moment where they try and transfer any and all risk down the chain through the contractor to the contractor's employees (you). Some of this, I am convinced is because the agent is too stupid to understand their own legal advice and modify the standard contract to include such ridiculous clauses. Simply take the above advice. It is exactly what I do.

The whole point of a Limited Liability company is that your liability is limited. Don't sign away that protection. It is dangerous and previously, I think only Lloyd's Names used to do it.

[SueEllen]

I should have add if the agent says something along the lines the written words don't matter - say to them something like you won't mind if I get my solicitor to look at it then like the other contractors I know.

[Ulukai]

Thank you so much for your reactions.
You really opened my eyes here.

The client is a huge multinational.

I didn't bother to try and set a maximum number and limit the liability, because I thought that I was on the safe side with my limited company.

I had a closer look at what I actually signed and this is much worse than I thought it was...

I wasn't used to the terminology used in UK contracts and I overlooked something very important.

The contract states that the staff (me) is also fully liable and should indemnify both the agency and the client against any and all losses actions, claims and liabilities and should also rectify all defects caused at own expense.

I never interpreted the contract that way before, but if I read carefully, I see now that I made a huge mistake...


I was such an idiot for ever signing this...

I guess I have no choice now but to do the remainder of the current contract (since I signed it) and be very careful...

I guess I should try getting it reviewed and modified by some online UK law service and for the next extension, they can either only make my limited company liable and not me personally, or I won't be extending anymore...

thanks again for opening my eyes

I'm now looking for a UK service that can check the whole contract and warn me for potential risks and make suggestions om how to change the contract to protect myself better.

In other posts here, QDOS seems to be mentioned most of the time. is QDOS a good option to help me out here? I have the impression that their contract reviews are more tax-oriented, while I am more worried about professional indemnity at the moment. Could I ask QDOS to suggest modifications in my contract as well ?

[Taita]

Thank you so much for your reactions.
You really opened my eyes here.

The client is a huge multinational.

I didn't bother to try and set a maximum number and limit the liability, because I thought that I was on the safe side with my limited company.

I had a closer look at what I actually signed and this is much worse than I thought it was...

I wasn't used to the terminology used in UK contracts and I overlooked something very important.

The contract states that the staff (me) is also fully liable and should indemnify both the agency and the client against any and all losses actions, claims and liabilities and should also rectify all defects caused at own expense.

I never interpreted the contract that way before, but if I read carefully, I see now that I made a huge mistake...


I was such an idiot for ever signing this...

I guess I have no choice now but to do the remainder of the current contract (since I signed it) and be very careful...

I guess I should try getting it reviewed and modified by some online UK law service and for the next extension, they can either only make my limited company liable and not me personally, or I won't be extending anymore...

thanks again for opening my eyes

I'm now looking for a UK service that can check the whole contract and warn me for potential risks and make suggestions om how to change the contract to protect myself better.

In other posts here, QDOS seems to be mentioned most of the time. is QDOS a good option to help me out here? I have the impression that their contract reviews are more tax-oriented, while I am more worried about professional indemnity at the moment. Could I ask QDOS to suggest modifications in my contract as well ?

Firstly, the reason PI is relatively cheap is because claims that actually reach the insurers are very rare. Secondly, it is not unusual in English contracts for the chain of liability to reach all the way down to the individual. Whether that is regarded as fair by the Courts is another matter.

You could be that one in (a very big number) unlucky one but it is very unlikely. If you are a competent, honest and decent worker - rest easy, enjoy the gig and spend the money!

[Ulukai]

I always get the agents to put my contact that my company is liable for £x amount of insurance.

Is that amount per year, per contract extension, or defined once as a maximum for all contract extensions in total?

For example, let's say that you start with a contract and a schedule attached for 3 months. In the contract you say that your company is liable for £500000 amount of insurance.

After every three months, a new schedule is annexed to the same contract for the next 2 years.

Is your liability then limited to £500000 during those next 2 years,
or is this a liability to be seen per extension schedule.
(2 years -> 8 extensions, if you later would get 2 claims from different periods you'll already be liable for £1000000) ?