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Ben Jones
Ben Jones, UK Lawyer
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A contract proposed by a client with my consulting

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A contract proposed by a client for working with my consulting company contains this clause:
Any action of a Consultant (including any fraudulent or negligent action) shall be, for the purposes of this Agreement, taken as the actions of the Supplier and the Supplier shall be responsible for those actions as if they were its own.
In the above, we are the Supplier and our staff are Consultants.
Should this be a cause for concern and should we seek to amend this clause (how)?
Submitted: 1 year ago.
Category: Law
Expert:  Ben Jones replied 1 year ago.
Hello, my name is***** am a qualified lawyer and it is my pleasure to assist you with your question today. What are the consultants likely to do which could cause damage to the client?
Customer: replied 1 year ago.

Well, in addition to basically criminal acts, which we would not wish to be liable for, I suppose examples would be things like deliberate or inadvertent disclosure of inside or sensitive information (e.g. to competitors) or deliberate/inadvertent negligent work causing the client to make a wrong business decision.

Expert:  Ben Jones replied 1 year ago.
It is unlikely that you would be liable for any criminal acts committed by them as the law will pursue the perpetrator, not who was burdened with having liability for such acts under contract. So the only concerns here are those linked to contractual performance, such as taking clients and confidential information, conducting the work incorrectly or negligently, etc. Having such a clause is not recommended as it exposes to an infinite amount of things that could go wrong and over which you have no control. Whilst you can be satisfied to a degree that the consultants you use are competent, that does not guarantee that they will act honestly or competently all the time and this is the risk you take by allowing such a clause. Rewording it may not provide the necessary protection anyway so the best thing is to negotiate to remove it, making it clear that the consultants, as self employed contractors, should be responsible for their own acts anyway, rather than have you burdened with such liability. I hope this has answered your query. I would be grateful if you could please take a second to leave a positive rating (3, 4 or 5 stars) as that is an important part of our process and recognises the time I have spent assisting you. If you need me to clarify anything before you go - please get back to me on here and I will assist further as best as I can. Thank you
Customer: replied 1 year ago.

Actually they are all our employees, not self-employed.

We have fairly standard PI insurance.

Expert:  Ben Jones replied 1 year ago.
ok that would still not change much, this could be covered by a PI insurance cover but obviously you need to check the terms to see if that would be covered. In the end it is still best to remove such a clause as the potential liability is too great (assuming insurance would not cover it)
Customer: replied 1 year ago.

Hmm, I am thinking that the client will believe we should be responsible for our employee's actions. Can you suggest a watering down?

Expert:  Ben Jones replied 1 year ago.
I will do, leave it with me, I will respond later this eve thanks
Customer: replied 1 year ago.

Great, thanks.

Expert:  Ben Jones replied 1 year ago.
You are welcome
Expert:  Ben Jones replied 1 year ago.
Hi there, thinking about it you, as an employer, may have vicarious liability over certain acts by your employees regardless of whether there is a clause like this in place or not. A good resource about this can be fund here: http://findlaw.co.uk/law/accidents_and_injuries/accident_claims/vicarious-liability.html In terms of amending the clause to try and limit it to cover ANY situation, it could be reworded like this: “Any action of a Consultant (excluding any deliberate acts or acts committed outside of the scope of their employment) shall be, for the purposes of this Agreement, taken as the actions of the Supplier and the Supplier shall be responsible for those actions as if they were its own.” Hope this clarifies?
Customer: replied 1 year ago.
Thanks, ***** ***** useful.
Expert:  Ben Jones replied 1 year ago.
You are welcome, all the best. If your original question has been answered I would be grateful if you could please quickly rate my answer by selecting 3, 4 or 5 starts at the top of the page - it only takes a second to do and is an important part of our process. I can still answer follow up questions afterwards if needed. Thank you
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