Indemnity clause - In need of advice
Thread poster: Anne Maria Christoffersen

Anne Maria Christoffersen  Identity Verified
Spain
Local time: 07:31
Member (2013)
English to Norwegian
+ ...
Apr 16, 2014

Hi everyone,

I hope you can help me out.

I haven't been in the translation business for a long time and so I am quite inexperienced with signing contracts, terms of agreements, etc. and I am not very comfortable with it (save standard non-disclosure agreements. So far I have declined signing indemnity clauses.

I was just sent a contract from what seems to be a big, well-established agency ( and with a good BlueBoard, although they do have 2 negative entries), and I would very much like to work with them as they can offer me work within my field of specialization (medicine).

However, their contract is rather extensive and includes an indemnity clause. Quite honestly the thought of possibly being held responsible for paying for the agencies lawyers, etc. in the case of a lawsuit scares me, although I assume it is very unlikely that this clause would ever need to be enforced. But still...

Does anyone here know anything about this? How likely is it that such a clause would be enforced? How common are lawsuits in the translation business? Please take into account that I work within the medical field. I have completed the university course in veterinary medicine (although I don't work as a veterinarian, I translate fulltime), so I am very familiar with terminology, diseases, etc. and so I don't think there is a great risk of my commiting a severe mistake, but just seeing a clause like that makes me wary because there is no way I could afford to pay any agency considerable amounts of money...

I don't know if I can post the clause here? It basically says (not quoting) that it concerns losses the agency suffers or incurs due to direct or indirect breaches or negligence on my part, due to my failure to perform the work assigned to me or if there is a delay in said work, and lastly as a consequence of any "breach of statutory duty" (?) or my misrepresenting or misstating anything.

My main concern, I guess, is that I might miss out on a lot of great agencies by always declining to sign these kinds of clauses. Still, another agency recently sent me a similar one, and that one is a leading agency within the medical field - yet they didn't object to my crossing out their indemnity clause... It makes me wonder if I should be wary when told by this other agency that the contract is non-negotiable... Is it better to stay clear?

I apologize for writing so much, I tend to...

Thank you all so very much for reading!
And any advice - or experiences from signing similar clauses - would be greatly appreciated.


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Shai Navé  Identity Verified
Israel
Local time: 08:31
Member
English to Hebrew
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To put it simply... Apr 16, 2014

Christoffersen wrote:
My main concern, I guess, is that I might miss out on a lot of great agencies by always declining to sign these kinds of clauses.


Good agencies (i.e. professional practices as opposed to mere brokers) don't try to impose such a clause or don't even mention it altogether.

Contracts are always written in favor of the party issuing them - that is a business fact. NEVER sign something that your are not comfortable with, but things are not always black and white and with good business partners there is always a room for logical negotiation. As you already did, if you really think that a certain client (agency or direct) is worth the hassle, cross out all the clauses that you are not comfortable with (and, when appropriate, suggest an alternative and more balanced wording for a certain clause). If the client accepts, great; if not, it is also great as you just saved yourself from getting into a business relationships with an entity that doesn't share your business and professional values, and those kind of relationships are guaranteed to be proven a mistake in the long-term.

On a broader note, this is why it is important for any professional independent service provider to have your Terms of Service.

[Edited at 2014-04-16 12:49 GMT]


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dianaft  Identity Verified
United Kingdom
Local time: 06:31
Member (2013)
German to English
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I haven't come across such a clause often, but Apr 16, 2014

ultimately you are responsible for your translations.

I agree with the above statement that complications with a client typically increase in line with the amount of preliminary paperwork. However, it also increases with the size of the agency. You need to feel comfortable with your clients and I think you're being wise to reject what you don't feel comfortable with. Personally, I wouldn't have an issue with signing it, but I am not you. I turned away clients for other reasons that may have been perfectly acceptable in your eyes. If you feel that you have been pushed to accept certain conditions, you simply won't enjoy the collaboration.
It takes time to build up a good client base. You can either choose to accept things that you don't like or invest that time into finding clients that are happy with your preferred terms.

Clause or not, you are responsible for your translations. I don't think there are a lot of actual court cases, but you can take out professional liability insurance. See for instance a recent poll on this subject: http://www.proz.com/forum/poll_discussion/266572-poll_do_you_have_liability_insurance.html


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Sheila Wilson  Identity Verified
Spain
Local time: 06:31
Member (2007)
English
+ ...
The lawyers here might be able to help with the wording Apr 16, 2014

I don't see any reason why you can't post the exact words as that's been done many times here, as long as you remove any identifying names.

I have no problem with liability clauses if they are strictly limited i.e. if I make a really bad mistake, I may not get paid; and if they can prove it was intentional then they can expect some sort of limited compensation. It has to be limited as I've never found affordable insurance that will cover every jurisdiction in the world. Seeing as I've only ever received one 30€ payment from one client in Spain, I don't think a Spanish policy would be very useful.

But your last comment would mean for me that no further dealings would be possible with this company:
Christoffersen wrote:
It makes me wonder if I should be wary when told by this other agency that the contract is non-negotiable... Is it better to stay clear?

Is this not a partnership agreement? Yet they feel they have the right to lay down the law to you and tell you what you're going to accept? And where else in your relationship will that apply? When they demand urgent work at the weekend? When they unilaterally reduce the rate?

In my book, everything is negotiable in a B2B situation. Of course, you'll want to keep things as simple as possible: no client will want to work with a provider who constantly queries every request, wanting round after round of negotiation before s/he will agree to do the work. But negotiations are inevitable at the start of a relationship, to set the ground rules. Later, they can just say "Can you do these 350 words for tomorrow?" and you can simply reply "Sure: normal rate applies", and get down to it. But that's only for relationships where there's mutual respect and trust, and you don't get to there from "this contract is non-negotiable".


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Shai Navé  Identity Verified
Israel
Local time: 08:31
Member
English to Hebrew
+ ...
My advice Apr 16, 2014

dianaft wrote:
Personally, I wouldn't have an issue with signing it...
Clause or not, you are responsible for your translations.


I would be wary about signing just any liability/indemnity clause, if at all. First, the amount of indemnity should be limited to the amount of the specific project. I've seen such clauses in which the stated indemnity ceiling was high as 300,000 to 500,000 USD/EUR for damages, and sometimes this is on top of the agency legal costs. Secondly, it is essential to mutually agree how an error or mistake is determined. Leaving it up to the client to decide what constitutes as an error, damage or violation of this clause is a bad business move.

And lastly, this is just a blunt attempt to pass all the liability to the translator, and this is not right. Those entities are calling themselves 'Language Service Providers' (although in reality many of them are just brokers with no clue about the translation process and some even contempt the profession) which means that they:

1) Should know the work, business, and market and pursue partnerships with professional translators who specialize in a certain field, thus limiting the likelihood of any catastrophic error being made out of lack of skills or negligence.

2) Have a QA system in place to catch any obvious and evident error (the type that can later lead to them or the end client complaining about a critical mistake that caused them damages) before the final translation is delivered to the client.

Trying to avoid that responsibility and pass all the liability to the translator reflects very badly on the entity one is dealing with. It usually means that this type of "agency" is probably just a broker competing on price alone, thus increasing their chance to be fooled and/or scammed by entities calling themselves translators who charge low but not surprisingly don't have the required skills or knowledge.
'
My advice is never sign anything that you are not comfortable with or put you in disadvantage. The fact that there aren't many lawsuits (usually those "agencies" are lacking the resources to invest in such a lawsuit anyway, and even for organization with the needed resources, the real and immediate trouble and costs for involved in such a lawsuit far outweigh the potential benefit) is irrelevant. Once you signed something you are liable. I've heard of too many translators signing adhesive contracts out of the belief that if this would go to court the court will throw it away because the contract is unfairly one-sided; This is a mistake and a critical one as you can never be sure that it'll happen. The best advice is to avoid any situation that puts one in a bad situation that one might later be able to somehow get out of.

[Edited at 2014-04-16 13:59 GMT]


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Woodstock  Identity Verified
Germany
Local time: 07:31
German to English
+ ...
These are generally US companies Apr 16, 2014

that have these types of contracts, and it's really overkill - I say that as an American citizen. The gazillion lawyers there have to earn a living somehow...
I have only worked with a large US company once that had an elaborate, ridiculous contract, which I agreed to because it was a prestigious firm that had blue chip clients. Well, I did exactly 2 jobs for them and no more, because the ISO requirements were so absurd that besides the translation work, the paper-pushing took over and I spent more time filling out forms and sending them back and forth than actually - you know -WORKING. It was not worth the time, and while the word price was ok on the surface, the extra steps you were not paid for reduced the rate to a pittance. I politely asked them to remove me from the database as I did not think we were a good fit. Never again.

All I'm saying is it may look good on the surface, but be wary. If they let you get away with crossing out parts of the contract, try them and see how it works out. However, in my experience companies that feel the need to have such contracts are very likely not all that great to work with. It seems to go hand-in-hand with an exaggerated sense of self-importance. Only my opinion, of course. Other translators may have had different experiences.


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Łukasz Gos-Furmankiewicz  Identity Verified
Poland
Local time: 07:31
English to Polish
+ ...
Non-negotiable contracts are a trend Apr 16, 2014

See, for a middleman to maximise his profits, the following is necessary:

– get the highest price possible from the client (or the next middleman)
– get the lowest price possible from the supplier (or the previous middleman)

A more advanced version includes cutting out responsibility/liability to reduce or eliminate risks.

These days agencies have largely lost their sanity, or whatever else it is which is missing, and they push for profit in desperate or parasitic ways.

Normally, yes, you are responsible for your translations. On the other hand, normally there's a buyer and seller and no middleman profiting from the transaction. Especially no reseller who acts like a client in buying and like a supplier in selling.

Also, normally one's responsible in general, but not exactly liable for the cost of each and every step the other party elects to pursue in order to prosecute its claims. And — depending on the jurisdiction — it may be more difficult by default than the pass-through situation generated by indemnity clauses.

So basically those contracts are another way in which agencies secure their position at our cost while insulting us in the process of making themselves impregnable.

What really worries me is the idea of non-negotiable contracts. This shows how far the agency hubris has gone by now.


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Anne Maria Christoffersen  Identity Verified
Spain
Local time: 07:31
Member (2013)
English to Norwegian
+ ...
TOPIC STARTER
Thank you all so much for your help! Apr 16, 2014

And for your time! I am very grateful for all your advice!

Woodstock: This one is a UK agency, although I too have seen similar clauses (and far, far worse) in many US contracts. The other company I mentioned - a leading one in the medical field, the one that did let me cross out their liability clause - is indeed a US agency. I have only ever worked for European agencies in the past, so I had no idea that US ones operate in the way you say. Spending lots of time filling out forms does not sound tempting at all...

Shai Nave wrote:

I've seen such clauses in which the stated indemnity ceiling was high as 300,000 to 500,000 USD/EUR for damages, and sometimes this is on top of the agency legal costs. Secondly, it is essential to mutually agree how an error or mistake is determined. Leaving it up to the client to decide what constitutes as an error, damage or violation of this clause is a bad business move.



Shai Nave: Thank you so much for all your advice. It was most helpful! I do indeed feel very uncomfortable signing this, and what you wrote about reaching an agreement regarding how to determine what consists a mistak/error sounds like a very good idea. I do feel the clause in question was rather vague about that.

Thanks for the link, Dianaft, that was a very interesting read! Insurance would definitely be a great idea if I ever sign these things in the future. Although I definitely agree with you that I am liable for my translation anyway, this clause seems (to me, at least) to go beyond gross negligence on my part, which I wouldn't have had a problem with. I think you are right in saying that one won't enjoy collaborating with someone when you accept terms you are not comfortable with.

I feel the same way you do, Sheila, that if the clause was more limited, then it would be ok. And that the compensation should be limited - that was a good idea, I will bear that in mind when negotiating similar clauses in the future. I too find it a bit strange when a contract can't be negotiated. And thanks for mentioning the Spanish policies, I didn't know. How funny that you live here in Spain, too!

This clause refers to all possible damage the agency may suffer as a result of a breach of the contract terms (data protection, confidentiality, etc.), not just to the quality of the translation. Although I do my best to protect data, etc., this too makes me a little nervous. I can take reasonable precautions, but it's impossible to safe-guard myself entirely. And I am not sure I understand what they mean by an "indirect breach"? This is the clause:

The subcontractor is responsible for and shall indemnify, keep indemnified and hold harmless XXX against all losses which the indemnified party incurs or suffers as a consequence of any direct or indirect breach or any negligent performance of the work assigned by the subcontractor, including in each case any non-performance or delay in performance of the work assigned or of any breach of statutory duty, misrepresentation or misstatement by the subcontractor.

Another similar clause in the same contract states the following:

If the subcontractor is in breach of any of his or her obligations in respect of this contract or the work assigned, the subcontractor, if required to do so by XXX, will promptly remedy the work assigned at his or her own expense. XXX will be entitled to recover from the subcontractor any cost incurred by remedial action and attributable to XXX.


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Anne Maria Christoffersen  Identity Verified
Spain
Local time: 07:31
Member (2013)
English to Norwegian
+ ...
TOPIC STARTER
Thanks for your input, Łukasz! Apr 16, 2014

Yes, that's exactly the part that worries me too - the having to pay for all costs related to a lawsuit... And I don't see why I should have to – save gross negligence on the translator's part of course, in those cases I understand why they sue.

And as to the non-negotiable contracts, I have already seen quite a few of those... And what is strange is that sometimes the things I would like to change are only minor details that are quite reasonable – for instance in Non-Compete Agreements, that when speaking of approaching clients that the word "indirectly" should be removed, so that I might still work for any end-client of theirs via another agency, or that it should specify that it refers to clients that I know through working with said agency (as opposed to any of their clients, which is impossible to abide by unless they show me their client list).

It's such a shame to have to decline work from agencies that seem serious when really I don't at all have any problems with their other clauses (confidentiality, non-compete, etc.).


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Łukasz Gos-Furmankiewicz  Identity Verified
Poland
Local time: 07:31
English to Polish
+ ...
... Apr 17, 2014

Christoffersen wrote:

The subcontractor is responsible for and shall indemnify, keep indemnified and hold harmless XXX against all losses which the indemnified party incurs or suffers as a consequence of any direct or indirect breach or any negligent performance of the work assigned by the subcontractor, including in each case any non-performance or delay in performance of the work assigned or of any breach of statutory duty, misrepresentation or misstatement by the subcontractor.


Sounds like a bunch of really antiquated legalese mixed up markedly progressive plain-language tendencies. Basically makes you their insurer for any trouble potentially caused by you.

If the subcontractor is in breach of any of his or her obligations in respect of this contract or the work assigned, the subcontractor, if required to do so by XXX, will promptly remedy the work assigned at his or her own expense. XXX will be entitled to recover from the subcontractor any cost incurred by remedial action and attributable to XXX.


The problem is the clauses places no restriction on the costs they can get from you. No reasonable or justified, just any (although the final effect will depend on the applicable law).

Plus, I obviously haven't seen the whole agreement, so I can't say if it's just a naming convention or actually something deeper, but being a subcontractor potentially makes you either a third party in the contract the agency has with its client or basically as assignee, which is roughly similar to just inheriting the agency's own obligations to the client rather than having your own contract.

Christoffersen wrote:

It's such a shame to have to decline work from agencies that seem serious when really I don't at all have any problems with their other clauses (confidentiality, non-compete, etc.).


They're acting like idiots and are destroying themselves. Doing things like that puts them on the path to only working with translators who are desperate, ignorant or careless (and with no guarantee of compliance with those contracts anyway).

As for the growingly laughable and unsustainable contents of their contracts, their lawyers need to understand that apart from effectively writing 'we own you' in the contract the client also needs to find a party will to sign that pile of rubbish.

Next thing agencies could use learning is politeness, which starts from such basics as not outright insulting people and talking down to them.

Like I said, the tendency is growing, and we may be forced to start competing against agencies just to make a living. And part of the reason why that happens is their ludicrous contracts which are untenable even now.

[Edited at 2014-04-17 05:15 GMT]


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Anne Maria Christoffersen  Identity Verified
Spain
Local time: 07:31
Member (2013)
English to Norwegian
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TOPIC STARTER
Thank you so much, Łukasz! :) Apr 17, 2014

I will definitely not sign this now.

Thank you for taking the time to explain everything! I had no idea what being a subcontractor actually implied in legal terms, that was very useful information indeed - and something I will most definitely take into account every time I read through contracts from a new agency.

And I agree with your conclusion; if contracts such as these are becoming the rule rather than the exception, then signing is simply not an option, and it would be better to work for direct clients.

[Edited at 2014-04-17 15:22 GMT]


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Łukasz Gos-Furmankiewicz  Identity Verified
Poland
Local time: 07:31
English to Polish
+ ...
... Apr 17, 2014

Christoffersen wrote:

Thank you for taking the time to explain everything! I had no idea what being a subcontractor actually implied in legal terms, that was very useful information indeed - and something I will most definitely take into account every time I read through contracts from a new agency.


Basically, a contractor is one who does something for a client. A subcontractor fills in for the contractor, under the contractor's direction or delegation. This is different from an agency simply being your client where you are the contractor.


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Anne Maria Christoffersen  Identity Verified
Spain
Local time: 07:31
Member (2013)
English to Norwegian
+ ...
TOPIC STARTER
. Apr 19, 2014

Thank you! I didn't know!

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