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Get Vendor Outsourcing in Writing

On Behalf of | Feb 26, 2015 | Business Transactions

A vendor may outsource the service it provides your employer. If you are negotiating vendor service agreements for your employer you should clarify in the agreement what portion of services, if any, the vendor can outsource to contractors and whether the vendor is still ultimately responsible for all services provided.

This is important since under New Hampshire law companies are generally not liable for their independent contractor’s negligence. The three exceptions to this rule are when there is negligence of the company in selecting, instructing, or supervising the contractor, or when the work is inherently dangerous or when the company has a duty which can not be delegated, such as the duty to maintain a safe workplace or the duty of a building owner to maintain safe premises.

If your company wants its vendors to be ultimately responsible for their outsourced services, you need to specify this clearly in the written agreement between your company and the vendor. Otherwise, it is possible your company may be left pursuing a negligence claim solely against the independent contractor who may have a lot less resources available to remedy the problem or to pay any monetary damages. While the vendor should still be liable for any breach of contract caused by the independent contractor not fulfilling the vendor’s contractual obligations, the vendor may not be liable for the contractor’s negligence which causes the company property damage.

For example, your company hires a property management firm to provide all facility maintenance for your manufacturing plant and that company, in turn, hires an independent contractor to provide janitorial services. Your company would be best served by clarifying in the facility maintenance contract that the property management company is responsible for any damages caused by its employees or agents, irrespective of whether or not they are independent contractors of the vendor. Not only would this contract clarification assist your company in holding the property management firm liable for any janitorial negligence causing damage to the premises, but also that firm would have an additional incentive to provide oversight for the independent contractor’s janitorial services.

Outsourcing contractual duties can be economically prudent because it allows a business to minimize overhead and thereby keep the cost down. However, your company should know up front, through expressed contractual provisions; a)whether your vendor will outsource and, if so, to whom, b) what level of oversight will be provided to your vendor’s contractors, and c) whether the vendor is ultimately responsible for its contractor’s errors and omissions.

J. Daniel Marr is a Director and Shareholder at Hamblett & Kerrigan, P.A. His legal practice includes counseling businesses and individuals on a variety of legal issues and advocating on their behalf. Attorney Marr is licensed and practices in both New Hampshire and Massachusetts. Attorney Marr can be reached at [email protected].