READ YOUR CONTRACT - beware the warranty clause?

[TransitTrucker]

Quite.

This particular contract isn't with an agency, it's direct with a small, new consultancy that are trying to get a foothold in a particular sector, using a niche technology that has a limited talent pool that all know each other. I don't see it being in their interest, in a very tangible way, to be in the business of milking contractors. Most of their hiring - me included - is done by word-of-mouth; they'd find the talent drying up quickly if they pulled any sort of fast ones. Interestingly, the contract also contains a clause that allows *the contractor* to terminate if the client is incompetent in their execution of the engagement.

Worst thing happens, I exercise the substitution clause and send in Bob to scratch his head and say "I dunno" for the requisite five days.

That is interesting inasmuch as the offending clause has been inserted under those circumstances. Or to put it another way, different agencies are trying it on. They are in different sectors. I am wondering if the agency's association is causing this. Or whether it is driven by all the misunderstanding around IR35. It is a plus for IR35 but may lose you your house if you try and defend against it (as with so many contract clauses).

[MicrosoftBob]

Another reason to be careful how much liquid assets you keep in the company

[TransitTrucker]

Another reason to be careful how much liquid assets you keep in the company

The penalties for signing up to a warranty are unthinkable. There are already clauses in most contracts to get rid of you double quick if you don't perform. These are by far enough protection for the client. The warranty can only be there for some other obscure reason.

Usually, contracts are written in a reasonable fashion and start off balanced. Then some contractor or other does something outlandish. The agency's shallow thinking leads them to write "protection" into the contract. This is a cheap solution compared with keeping tabs on contractor performance with a telephone call per week. The contract become unwieldy, unbalanced and unenforceable (which doesn't affect how much it costs to defend litigation). I actually had one recently where the wording said something like "26 days plus VAT". The so called lawyer had inserted something in the wrong place in a sentence. Ridiculous but very serious.

[SueEllen]

The agency's shallow thinking leads them to write "protection" into the contract. This is a cheap solution compared with keeping tabs on contractor performance with a telephone call per week. The contract become unwieldy, unbalanced and unenforceable (which doesn't affect how much it costs to defend litigation). I actually had one recently where the wording said something like "26 days plus VAT". The so called lawyer had inserted something in the wrong place in a sentence. Ridiculous but very serious.

The "so called lawyer" is often an legal advisor which you only find out about when you threaten and then do use a lawyer yourself. Most are very quick to check up on whether your lawyer is a real one or not.

And a few even if they realised you are using a qualified lawyer still come out with tulip about "they can't believe a contractor will use a lawyer for such a small contract" and "your lawyer must be inexperienced to look at a contract because all other contractors never do".......

[borderreiver]

It is a plus for IR35 but may lose you your house if you try and defend against it.

Well, no, surely not. That's the point of limited liability. But you could lose your company and all the cash in it.

As you've said, if a customer wants a warranty, then he has to pay extra for it. Otherwise, he can do one.

[TransitTrucker]

Well, no, surely not. That's the point of limited liability. But you could lose your company and all the cash in it.

As you've said, if a customer wants a warranty, then he has to pay extra for it. Otherwise, he can do one.

Not sure that limited liability is that limited anymore. But, I am no lawyer.

[BlasterBates]

I think if your careful it shouldn't be a problem. I used to do fixed price contracts with warranty and all the rest of it.

First of all you need to write a spec. This shouldn't be a problem I did it all the time as contractor, and a test spec. Both of these don't need to be more than a couple of pages.

Then you need sign off, i.e. get your client to agree, that's what you are going to deliver.

Once you have that it is pretty water tight, because they have to show that the software contradicts the spec. When the customer is trying it on that is actually very difficult to do. In other words if what they're talking about isn't described in the spec, then it has nothing to do with the warranty.

Just wanted to point that out

One customer in the company where we did fixed price contracts refused to pay, so we took him to court but the customer had no documents other than stuff we gave him, and according to the contract unless he objected in writing within 7 days then he'd accepted it, so he didn't have a leg to stand on. and this was a system that was completely useless to them. So this was a a legal eye opener to me as it showed that even a system that is unusable is no excuse not to pay the contractor. I mean if they agreed to the spec. that's what they get.

The other thing is warranty is with respect to bugs not "missing features" (remember the spec), and my experience is it rarely takes more than half a day to locate a bug, and then locate the "guilty party" in the code control system, and if you didn't cause the problem then simply bill the client for your time.

As long as you write a spec, test spec and get it signed off and software accepted you should be fine.

I personally would quite welcome the challenge, but I would attach the above conditions to the warranty and of course add some margin as well.

I think a contract of this nature would actually be clearly outside IR35, which is why I would like it.