Contractual Liability Exclusion Clauses
Word is going around that there are clients out there, who are telling their staffing agency providers that they won't do business with them unless the agency agrees to "hold harmless" indemnity clauses. If you want to know what those are, just scroll down through earlier posts - or here's a
link.
Apparently, they're also telling them that other agencies are signing their indemnities and that, unless they do, they're likely to miss out.
We're going to spend a little bit of time, in this forum, sorting a few things out.
Now the first thing you've got to know is that you need to match the risk you’re taking on, if you agree to these clauses, to your insurance cover or other risk management strategies that you're using. A mismatch can leave you seriously out of pocket.
So, if you're thinking about signing a hold harmless indemnity, just check your insurance policy first. You might find that it's got a clause that we'll call a "contractual liability exclusion". These are pretty common, and they go something like this:
“Your insurance doesn't cover any additional liability you take on under a contract. Any liability that the law wouldn't have imposed on you, but only arises because it is imposed by a contract, won't be covered, including:
- where you agree to pay predetermined amounts (liquidated damages) or any penalty.
- where you undertake to 'hold harmless', 'indemnify', or 'guarantee' another party, which means you've committed to shoulder their losses if things go wrong, even if the fault isn't entirely yours.”
In later posts, we'll talk about "responsible procurement" and "responsible supply". In the meantime, you might want to check your insurance policies to see if they have these exclusions. Get to understand how they work.
And even if you do happen to have contractual liability cover (and some of you might), make sure you understand its limitations.
Let's get talking ...
ACW
