Reply to: Liabilty - IT contracting

[Saddo]

Sounds like you had a (unwritten) contract between your LTD and him personally, result! I'd take him to court.

Actually, you are probably right (as always), but it was so long ago that I really can't be arsed.

[Wanderer]

He was paying me with a personal cheque, not company cheque. There's the difference.

Sounds like you had a (unwritten) contract between your LTD and him personally, result! I'd take him to court.

[Saddo]

If the company is insolvent then you won't get paid. What's the difference if you had a contract or not?

He was paying me with a personal cheque, not company cheque. There's the difference.

[Wanderer]

I'm sure we've all been guilty of making assumptions that everything is okay but had reason to doubt it later. I know I have - dodgy client who refused to sign the contract, I let it ride and he paid the first couple of months, then payments started slipping. I walked, he didn't pay for the final month and started making noises about my incompetence (to warn me off taking him to court with a winding up order). My legal brief looked at the situation and said that I would win no problem - but the company was nearly insolvent so I would spend thousands of pounds winning the case and get jack sh1t back. I took it on the chin, with a reminder that I would never do work without having a signed contract.

If the company is insolvent then you won't get paid. What's the difference if you had a contract or not?

[Dearnla]

You're not liable unless you signed a contract saying you are. If you are working through an agency then your company (of which you are an employee, right?) should be at least supplying your services and warrantying they are fit for purposes and in line with best industry practice, etc.

There's a whole world of difference between Wipro supplying a Turnkey system and you doing a bit of coding on a day rate. That's why they charge £1k a day and you don't - it's all about reputation and warranties.

Oh and Penalty Charges are illegal at law - if you mean Liquidated Damages for late delivery, then they have to be a "genuine pre-estimate of losses" and are a Sole Remedy. In other words, if the project's late, LD's will be claimed and there's naff all else they can do.

Now, tell me, who signed the contract that contained the LD's?? Unless it was you personally, you're not liable.

[Old Greg]

What if your system works really well 99.99% of the time but it has a latent problem then one day it goes wrong and since everyone trusts it, they don't double check and someone gets hurt then they try to blame you?

I configure the clinical content, don't build etc. The structures are pretty clear where responsibility lies, particularly as unlike most of my colleagues I don't have a clinical qualification so cannot be professionally accountable for clinical decision making.

[Ignis Fatuus]

my employer (client)

Sigh

[Saddo]

The agent rushed me through the signing as I had to sign and start work the same day

Act in haste, repent at leisure would apply to that situation.

I'm sure we've all been guilty of making assumptions that everything is okay but had reason to doubt it later. I know I have - dodgy client who refused to sign the contract, I let it ride and he paid the first couple of months, then payments started slipping. I walked, he didn't pay for the final month and started making noises about my incompetence (to warn me off taking him to court with a winding up order). My legal brief looked at the situation and said that I would win no problem - but the company was nearly insolvent so I would spend thousands of pounds winning the case and get jack sh1t back. I took it on the chin, with a reminder that I would never do work without having a signed contract.

[CheeseSlice]

What is the limit of liability for an IT contractor? (Software developer).

In addition to what saddo said about the LTD liability being overruled, you may want to thoroughly check the paperwork you sign with the agency. Some agents (not sure how many do this) get the contractor to sign a declaration that you're suitable for the job. One that I signed was a 'deed' in which one bullet point stated that "I personally guarantee the work". The agent rushed me through the signing as I had to sign and start work the same day. It wasn't until I had the documents reviewed by a lawyer that it dawned on me what could have happend if something went wrong.

[Saddo]

What if your system works really well 99.99% of the time but it has a latent problem then one day it goes wrong and since everyone trusts it, they don't double check and someone gets hurt then they try to blame you?

I think the jury will probably want to know what the client did with respect to testing before they went into production. Leastways, I would hope that the defendants legal bod would be shining a light in that direction.

[Wanderer]

I do work which will inform the medical treatment that seriously ill patients will receive. However, within the project governance strucutres I work in, it's hard to see how any liability would fall to me, as the sign-off, linical and corporate responisbility sits elsewhere, so I don't look to insure any liabilities that may arise from 'clinical incidents'.

What if your system works really well 99.99% of the time but it has a latent problem then one day it goes wrong and since everyone trusts it, they don't double check and someone gets hurt then they try to blame you?

[Old Greg]

Try mentioning that you help set strategies for UK Retailers. Like where to build 4 of your £100m warehouses, how big they should be and what they should all do and watch your PI insurance go through the roof.

Now I just tell them "I do numbers".

I've scratched my head about this as well. I do work which will inform the medical treatment that seriously ill patients will receive. However, within the project governance strucutres I work in, it's hard to see how any liability would fall to me, as the sign-off, linical and corporate responisbility sits elsewhere, so I don't look to insure any liabilities that may arise from 'clinical incidents'.

[Sockpuppet]

I haven't heard of anyone in the general software development industry being prosecuted, but I do know that the questions for PI insurance include statements about whether you will be working in the nuclear or other industries which could be very costly to defend.

Try mentioning that you help set strategies for UK Retailers. Like where to build 4 of your £100m warehouses, how big they should be and what they should all do and watch your PI insurance go through the roof.

Now I just tell them "I do numbers".

[Saddo]

Wanderer is right in his summation, but I would add the following addendum.

The Limited company puts an umbrella around your personal assets. However that umbrella can be removed by court order IF you have acted fraudulently. For example if you had stated that you were a sh1t-hot Un1x admin guru but the closest you had got was reading the 'Learn Un1x in 24 hours' book. But do remember that that would apply if you were a permanent employee and had claimed expertise which you didn't have - it's not limited to just contracting.

Professional Indemnity insurance is what covers the risk. As you can appreciate, in any claim they would step in and give their team of lawyers the go-ahead to defend the case (unless you had truly been dishonest, in which case your PI insurance would be invalid anyway).

I haven't heard of anyone in the general software development industry being prosecuted, but I do know that the questions for PI insurance include statements about whether you will be working in the nuclear or other industries which could be very costly to defend.

[Wanderer]

If the project I’m working on is delivered late (there are penalty charges) and my employer (client) feels that its my fault (not producing the required work on time). Can they then sue me to recover those costs? Has that happened before? In a worse case scenario - could they take me personally (not just my limited company) to cleaners? (i.e. I would be bankrupt)

I am aware that PI insurance is available (I have it) but does it fully protect you in all circumstances?

When trading through a limited company, your liability as a shareholder and director is limited to the issued share capital in the company - typically 1 pound.

The contract is between your company and the client (or perhaps agency). Your client is not your employer, they have engaged your company which supplies you as the worker to carry out the contract.

If they decide to take action against your company then you can just take out any cash retained in your company, cease trading with that company and start a new one the same day. Even if the case goes to court and they find against you, they won't be able to enforce the judgement on your company because your company will have no assets. They can't come after you personally unless you have committed fraud or some other crime which is then a criminal matter, not a civil one.

I wouldn't worry too much about penalties in your contract. They are a good pointer to being outside IR35 (shows financial risk) even though they don't have much hope of enforcing the penalties against you.