indemnity clause - should I feel sorry?
Thread poster: Tomas Foltyn

Tomas Foltyn  Identity Verified
Slovakia
Local time: 10:28
English to Slovak
+ ...
Apr 10, 2013

Dear all,

I have signed a supplier agreement with an agency, with the contract including the following clause "I hereby indemnify X for direct, indirect and any consequential loss suffered by X in respect of any work carried out by or undertaken by myself." As far as I know, indemnity clauses are an integral and standard part of such agreements, so I tried not to be too concerned about it, I signed it and sent it away. On second thought and after I slept on it, though, I began to wonder whether or not the clause is too strongly worded. In the interim, I've already accepted an assignment from the agency, so it doesn't look like I'd be able to backtrack on my decision anyway even if I wanted to. What do you guys reckon? Should I feel sorry now? By the way, the agency doesn't seem dodgy in any way and it has a close to 5-star rating on Blue Board (from some 20 entries in all), so apparently quite a few people are happily working for the agency.

Thanks
Tomas

[Edited for a missing word]

[Edited at 2013-04-10 20:18 GMT]


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Łukasz Gos-Furmankiewicz  Identity Verified
Poland
Local time: 10:28
English to Polish
+ ...
Mixed feelings Apr 10, 2013

Dear Tomas,

Sometimes reputable businesses can have awfully strongly worded contract templates, some of which may actually be outright rude. That just happens.

If you wish to understand lawyers, a phrase used by Grisham could come of aid: "the lawyerly compulsion of overkill". It's easy to get hyped on the full-on and all-out legalese you're using when your client has hired you to protect him in any way imaginable. DYI lawyers, that is amateurs doing the same work, are liable to the same compulsion.

When I encounter contracts I don't like, I tend to point out right away that I need changes. Sometimes the agencies agree, sometimes they go silent, I've never had anybody actually refuse.

The problem with indemnities is that everybody wants to get rid of the economic risk in addition to the usual skewed perception of norms depending on one's own situation. We want agencies to man up and take responsibility like a boss if they act as one for all intents and purposes (including replacing us in the credits, sweeping us under the rug with NDAs and non-competes and so on). They, in turn, would possibly prefer to live off passive income or at least earn money by the problem-free forwarding of e-mail and focus on marketing. There's got to be a middle ground somewhere, even though I personally believe they should man up anyway. Or a better solution altogether, more on which later.

One job will not likely make you keel over. Just be extra diligent and save your hide by pointing out anything of (in)significance to the Project Manager. Complain about any defects of the source text like there's no tomorrow, to make sure they've noticed. This should protect you unless your jurisdiction is overly friendly towards professional businesses acting unprofessionally.

Then, go and request a change after reviewing your contract. Your contract does not probably require you to accept any jobs that you don't want to accept, and there's probably a symmetrical exit clause anyway (as a last resort you can terminate).

Now the better solution I mentioned before is to tell the agency that if it wants to free itself of some annoying liability, it should settle that between itself and the client, or get insurance, or preferably both. It is not uncommon for all sorts of service contracts to exclude consequential or indirect loss. In fact, it's rare to see liability for consequential or indirect loss not excluded.

The problem with consequential or indirect loss is the unpredictability and vagueness. The court will rule one way or the other but an "entitled" party is likely to exaggerate its entitlement. The typical rule in case of any damages is that the party suffering the damage needs to mitigate the damage rather than sitting idly on its rear end and looking forward to getting compensated. Being indemnified for consequential or indirect loss may encourage a party to be lazy instead. In the case of translation agencies (let alone a more modern "outsourcer", i.e. a proper e-mail forwarding middleman), it may also encourage them to accept liability because they 1) want to please the client but 2) think they can pass it on to you (not like that will work in court but their attempts won't make a translator's life easier). There are normally clauses to prevent this type of thing with indemnities, typically used by insurers (whose liability runs on a similar mechanism) but yours is probably a very basic one and at any rate it's one-sided and not a product of bilateral negotiations that cover each party's interests.

The good news is that your agency may actually be unaware of the significance of the contract provisions. It may well be a long-forgotten job done by some lawyer whose name nobody remembers or a sales manager's DYI weekend project. Ask them and give them the chance to prove if they're simply a nice agency with a not too nice contract. You might be able to sit down with them and arrive at some kind of language that makes both of you happy or at least content.

Note also that if there's a cap on your liability anywhere (not expecting one to be there but it's possible), then that would put the liability for consequential or indirect loss in a different light.

Last but not least, you aren't likely going to find too many agencies willing to offer you reasonable liability limits. Like I said above, they will generally want to pass down all liability to you with the exception of some agencies who are willing to take responsibility for their own actions (e.g. bad proofreading, bad communication) or inactions (e.g. no proofreading, failure to communicate) or fend off groundless complaints from clients on their own and only go after you if the defence fails.

Heck, if there's any agency reading us who doesn't try to shove all the liability on the translator then I'm willing to work for you guys and might even give you a discount.


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Tomas Foltyn  Identity Verified
Slovakia
Local time: 10:28
English to Slovak
+ ...
TOPIC STARTER
Many thanks for your comprehensive answer Lukasz! Apr 10, 2013

You raised a few interesting points that painted a broader picture of the issue for me and had me thinking a little. Once I’m done with this job, I will suggest to them that the clause should be either dropped or at least re-phrased with a view to making it more balanced.

One of the things I began to wonder about following Lukasz’s posting is: why is it that an agency wants translators to agree to such a clause if it (most probably) has its own professional indemnity insurance? The only two reasons I can think of is because it wants translators to be extremely diligent or that it wants to cover potential losses that may go beyond the agency’s own insurance limit. At any rate, after I thought about it again I just concluded to myself that I simply need to show a greater deal of assertiveness next time, rather than being this imprudent and accepting whatever an agency may throw at me. This may well actually apply to a lot of us who still sign such agreements.

BTW, regarding my question as to whether I should feel sorry, then obviously I shouldn’t, not at the moment anyway. I would only begin to feel sorry if I did indeed make such a massive mistake as to warrant a lawsuit. God forbid!

Tomas


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Sheila Wilson  Identity Verified
Spain
Local time: 09:28
Member (2007)
English
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Abusive clause Apr 10, 2013

Abusive is the way most European law courts would see it. Unfortunately, that "most" might not include the court judging your particular case. I would advise the same as Łukasz: finish the current job, then tell the agency that you want that clause reworded before you work with them again.

It is normal for there to be this type of clause, but the agency's contract with the end client will no doubt say their own liability will be restricted to any monies paid to them (or words to that effect), and so should yours. In other words, if you make one or more major errors that, for example, cause the end client to lose a contract, you stand to forfeit your fee, and the agency forfeits their fee, too. It's up to the client to insure against the loss of the contract.

The agency should be taking much more of the blame than you, anyway, as they are supposed to review the translation before delivery. That's part of their service, and the reason why the end client pays so much more than you receive.

As far as professional indemnity insurance is concerned, I would always advise translators to look carefully at it before buying. I personally had insurance through my house and car insurer for several years (without ever making a claim) when I lived in France. However, when I moved to Spain and had to change company, I discovered that these policies very rarely cover outside the translator's country. I imagine ones arranged by translators' associations are world-wide - I don't know - but the one I had certainly didn't cover lawsuits against my clients in the USA or Japan, or even within the EU outside France. Since I've never had a client in Spain, I haven't bothered to pay for insurance here. I'll rely on checking contracts carefully, doing my job diligently, and keeping my fingers crossed!

At this point, I'd like to mention that I'm not a lawyer and can't be held responsible for the consequences of any action you take, even if I've advised it!


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Tomás Cano Binder, BA, CT  Identity Verified
Spain
Local time: 10:28
Member (2005)
English to Spanish
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Don't do it again! Apr 11, 2013

Every time I find such a clause, I propose that the clause is complemented with a limit to the liability on my part in case of an adverse event. I usually propose to limit the total sum of liabilities for an event to double the amount I was paid for the job in question.

Of course new customers coming around with the abusive clause never accept my conditions, and I am happy to thank them for their interest and wish them all success.

Better safe than sorry!


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Tomás Cano Binder, BA, CT  Identity Verified
Spain
Local time: 10:28
Member (2005)
English to Spanish
+ ...
Not to worry, but try to avoid it Apr 11, 2013

Tomas Foltyn wrote:
BTW, regarding my question as to whether I should feel sorry, then obviously I shouldn’t, not at the moment anyway. I would only begin to feel sorry if I did indeed make such a massive mistake as to warrant a lawsuit. God forbid!

Indeed, I think one would face a lawsuit only in case of damages caused by gross negligence, but... won't the doubt roam around your head for some time? Completely unnecessary waste of brain cells. Next time, make sure you request the liability clause limited to some reasonable figure, and sleep well at night from day one with a new customer.

On the agency's side I wonder whether they should use the experience from the real estate world: when a potential tenant does not question the rate and does not negotiate... start looking for a collection agency! Those of us who believe in agreements and honouring them should clearly declare what we are ready to agree to, and strike out the things we don't believe in.


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Łukasz Gos-Furmankiewicz  Identity Verified
Poland
Local time: 10:28
English to Polish
+ ...
Problems Apr 11, 2013

Tomas Foltyn wrote:

One of the things I began to wonder about following Lukasz’s posting is: why is it that an agency wants translators to agree to such a clause if it (most probably) has its own professional indemnity insurance? The only two reasons I can think of is because it wants translators to be extremely diligent or that it wants to cover potential losses that may go beyond the agency’s own insurance limit.


Probably both but I would be inclined to think about the latter. Generally, a strong party in negotiations wants to cover all angles for itself and ward off as much liability as possible.

BTW, regarding my question as to whether I should feel sorry, then obviously I shouldn’t, not at the moment anyway. I would only begin to feel sorry if I did indeed make such a massive mistake as to warrant a lawsuit.


Unfortunately, it doesn't need to be a big mistake. It only needs to be big damage. If you simply make a typo in a number and somebody loses $1M for it, you can be sued. The other side of the coin is contributory negligence, such as agencies and clients skimping on proofreaders or workers simply failing to verify this or that. But contributory negligence is not something the claimant would mention or the court take into advisement of its own initiative. You'd need an agile, fast-on-his-feet, unafraid lawyer to keep deflecting such barrage thrown at you in court lest it stick.

Unfortunately, the chance of thousands of bucks being charged to you for a negation you missed or a number you miscopied is pretty high. The law doesn't take into account that translators, even though they may be business owners in a technical sense, are normal people working for normal wages and they don't have thousands or millions to take over all possible economic burdens.

The above problem is currently growing in size due to skimping on proof and review, as well as forcing translators to work with shorter deadlines on larger texts and for less money. Fortunately, at least in Poland, a reasonable court should have enough decency to take account of the urgency factor, especially for a professional client who should know the effect of tiredness or haste, and skimped on the proper preparation of a text to be printed. I know of a case lost by a client who wanted to be reimbursed for reprinting a leaflet over a typo after declining to order a proof job.

Another problem spot here, though, is that one could see such a situation as a window of opportunity and just milk the liability ground. Again, a good lawyer could stand his ground and insist that any wronged party should mitigate the damage or loss. Depending on how sensible the law and the court are, bizarre claims that don't make much economic sense might be denied, e.g. the reprint of an entire material due to a single typo, even if proofread prior to printing, awarding some damages instead.

Tomás Cano Binder, CT wrote:

Every time I find such a clause, I propose that the clause is complemented with a limit to the liability on my part in case of an adverse event. I usually propose to limit the total sum of liabilities for an event to double the amount I was paid for the job in question.


Sorry if this is prying but would you mind sharing how often, approximately, agencies and clients agree or reject the proposal of such a limitation (i.e. one where you can forfeit your fee but not pay any damages, i.e. never go below 0)? I have a similar clause in my ToS right now too.

In my experience from the Polish market, agencies are mostly concerned with getting you to fix any mistakes ASAP and without additional fees if anything pops up. There seems to be a large soft knee effect in place, which makes agencies want you to introduce corrections that aren't really justified, just for the sake of the problem going away or the client staying.

[Edited at 2013-04-11 15:57 GMT]


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Samuel Murray  Identity Verified
Netherlands
Local time: 10:28
Member (2006)
English to Afrikaans
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@Tomas Apr 11, 2013

Tomas Foltyn wrote:
I have signed a supplier agreement with an agency, with the contract including the following clause "I hereby indemnify X for direct, indirect and any consequential loss suffered by X in respect of any work carried out by or undertaken by myself."


Very few agencies with such a clause in their contract would be willing to change the contract just for you. This means that if you refuse to sign it, there is a very good chance that you won't get any more work from them.

I'm not sure if it would be ethical of me to advise you to simply default on the job (i.e. simply tell them that you've changed your mind and won't do the translatiobn), but unfortunately that would be one option you could consider. If you're willing to risk it, my advice would be to finish that one job, and then cancel the agreement (you can do that). Then ask if they would accept a revised agreement.

I can't believe translators thing that such clauses are "standard" and a "normal part of business". Practically no agency would ever sign a similar clause in which you are being indemnified by them. In many other professions, it is the service provider whose contract contains this clause, so why in the translator world should it be the client who gets to get this clause?

By the way, the agency doesn't seem dodgy in any way and it has a close to 5-star rating on Blue Board (from some 20 entries in all), so apparently quite a few people are happily working for the agency.


That is because no-one who had worked for them refused to sign the contract, and those who have refused to sign the contract can't post any Blue Board comments about them because they haven't done any work for them. And don't forget that many translators simply sign and send.


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Tomas Foltyn  Identity Verified
Slovakia
Local time: 10:28
English to Slovak
+ ...
TOPIC STARTER
True! Apr 11, 2013

Samuel Murray wrote:

I can't believe translators thing that such clauses are "standard" and a "normal part of business".


Well, on second thought, it's truly twisted in a way to bind oneself - voluntarily - to such a course of business. I must've been delirious to subscribe to something like that. Anyway, apparently the only reasonable option I have now is to bend over backwards with this particular translation, and I'll do just that.


That is because no-one who had worked for them refused to sign the contract, and those who have refused to sign the contract can't post any Blue Board comments about them because they haven't done any work for them. And don't forget that many translators simply sign and send.


Exactly. And this is what was probably at the core of my warped logic - if so many people do it, then it can't be that bad! Completely misguided, I know.


Also thank you, Sheila and Tomás, for your comments. All four of you definitely put things into perspective for me.


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Tomás Cano Binder, BA, CT  Identity Verified
Spain
Local time: 10:28
Member (2005)
English to Spanish
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They never accept it Apr 12, 2013

Łukasz Gos-Furmankiewicz wrote:
Tomás Cano Binder, CT wrote:
Every time I find such a clause, I propose that the clause is complemented with a limit to the liability on my part in case of an adverse event. I usually propose to limit the total sum of liabilities for an event to double the amount I was paid for the job in question.

Sorry if this is prying but would you mind sharing how often, approximately, agencies and clients agree or reject the proposal of such a limitation (i.e. one where you can forfeit your fee but not pay any damages, i.e. never go below 0)? I have a similar clause in my ToS right now too.

The answer is simple: clients who have a clause making you fully responsible with no limitation never accept the limitation. Of course this means that I do not get any work from them, and that is fine by me too, since my most valuable asset in life is a full peace of mind.


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Samuel Murray  Identity Verified
Netherlands
Local time: 10:28
Member (2006)
English to Afrikaans
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They might accept it Apr 12, 2013

Tomás Cano Binder, CT wrote:
Łukasz Gos-Furmankiewicz wrote:
Sorry if this is prying but would you mind sharing how often, approximately, agencies and clients agree or reject the proposal of such a limitation (i.e. one where you can forfeit your fee but not pay any damages, i.e. never go below 0)? I have a similar clause in my ToS right now too.

The answer is simple: clients who have a clause making you fully responsible with no limitation never accept the limitation. Of course this means that I do not get any work from them, and that is fine by me too, since my most valuable asset in life is a full peace of mind.


My suspicion is that most PMS at such agencies don't even know what the clause means, and regard it as "standard, because our lawyers say it is standard", and may be baffled when translators refuse to sign it. Don't just assume that agencies who have this clause has it for malicious reasons. There are many "standard" clauses in contracts that protect the one party much better than the other.

I've had cases where I crossed out the offending lines and the agency just kept sending me work. However, I've had just as many cases (or more) where the agency refused to work with me if I don't sign it, unaltered. I always try to delete as few clauses as possible, but I always scrap indemnity.

As for other offending clauses:

Depending on the wording I also sometimes scrap the non-competition clause, because it is often unimplementable except by corporations with large amounts of resources (i.e. not by freelancers).

And I've noticed a weird trend in the copyright clauses whereby they expect me to warrant that copyright is successfully transferred to them in their jurisdiction -- how on earth am I supposed to warrant that? Or even to warrant that my translation does not violate someone else's copyright.

Something that I'm not sure of how to handle are clauses that I promise to comply with some or other law in the agency's country (e.g. their data privacy laws) or even in my country. I never really thought about that until an agency actually asked me (after I signed it) to describe to them what steps I take to comply with it.

And finally I'm not sure if my own country's laws allow me to sign myself into the jurisdiction of the courts of the client's country (as that is something that is often written in such contracts).


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Łukasz Gos-Furmankiewicz  Identity Verified
Poland
Local time: 10:28
English to Polish
+ ...
... Apr 13, 2013

Tomás Cano Binder, CT wrote:

Łukasz Gos-Furmankiewicz wrote:
Tomás Cano Binder, CT wrote:
Every time I find such a clause, I propose that the clause is complemented with a limit to the liability on my part in case of an adverse event. I usually propose to limit the total sum of liabilities for an event to double the amount I was paid for the job in question.

Sorry if this is prying but would you mind sharing how often, approximately, agencies and clients agree or reject the proposal of such a limitation (i.e. one where you can forfeit your fee but not pay any damages, i.e. never go below 0)? I have a similar clause in my ToS right now too.

The answer is simple: clients who have a clause making you fully responsible with no limitation never accept the limitation. Of course this means that I do not get any work from them, and that is fine by me too, since my most valuable asset in life is a full peace of mind.


I wouldn't be so sure about that, at least unless we're talking about a lot of very specific and very outrageous language in their standard contract. Just like some translators just sign and send, some agencies may well put a lawyer on the job and just forget about it until somebody asks for variation, in which case the agency may relent if it really needs you and already has insurance, and some liability cap agreed with the client.

What about direct clients, though?

Samuel Murray wrote:
And I've noticed a weird trend in the copyright clauses whereby they expect me to warrant that copyright is successfully transferred to them in their jurisdiction -- how on earth am I supposed to warrant that? Or even to warrant that my translation does not violate someone else's copyright.


I've seen that too but I knew something was wrong in the translation "industry" the moment I saw agencies refer to themselves as "outsourcers". This clause and the one below:

Something that I'm not sure of how to handle are clauses that I promise to comply with some or other law in the agency's country (e.g. their data privacy laws) or even in my country. I never really thought about that until an agency actually asked me (after I signed it) to describe to them what steps I take to comply with it.


...are outrageous examples of dodging and passing down whatever liability they can because they can – since they too want peace of mind. They simply make it the translator's responsibility at law, regardless how stupid that is in fact, and forget about it.

And finally I'm not sure if my own country's laws allow me to sign myself into the jurisdiction of the courts of the client's country (as that is something that is often written in such contracts).


They very well may, especially if there is a good connection between the job and the country of jurisdiction. Pick-and-choosing laws and courts is routine in business contracts to the point there are entire regulations dealing with just that. I wouldn't count on such a clause turning out invalid, even if examined by a court in your own jurisdiction.

Bottom line, this all is a control thing. The translation sector has slipped out of translator's control or even good old agencies', the current trend is for corporate clients to control it directly, and "outsourcers".

[Edited at 2013-04-13 17:42 GMT]


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