Liability whist sub-contracting

[MagicalTrevor]

I'm looking to the ability to sub-contract for another business and our concerns are related to liability and what happens if something goes wrong.

The business offers a service, let's say they look after Windows Servers, but to widen their service options they'd also like to offer a service for Linux servers. Unfortunately the business isn't big enough to employ somebody with the skills.
I'd like to grow my business so I am able to offer to support the Linux servers. This might suit both businesses because they can offer a wider range of services and I can benefit from their established infrastructure and wider marketing ability.

The concern lies with what happens if the server fails and for whatever reason can't be recovered. We both have professional indemnity and public liability insurance, is this enough? They would like to not have any responsibility for any failures and I can fully understand that.

Also, how do I protect money in the business, I.e. If I have £20k in the bank then I want to make sure that's protected if there was a 'problem' with a customer.

I hope that's explained things clearly

[trickywoo]

MagicalTrevor said:

I'm looking to the ability to sub-contract for another business and our concerns are related to liability and what happens if something goes wrong.

I hope that's explained things clearly

Not really.

However, if all you are doing is supporting the server any hardware failure shouldn't be down to you. If you are negligent in something you do and then the server fails that's another matter, which should be covered by your insurance. You should make it clear that you aren't insuring the server for failure in any contract you set up, which would be a good idea BTW.

Assuming your company is limited your personal assets will be safe. The £20k in the company bank will not. To make it safe you have to remove it from the company (legally and pay the relevant taxes etc).

Perhaps if you are this worried about something really bad happening its not for you?

[TooLateForAName]

I think all of this sort of thing is down to the contract and sla. You need to be careful to make sure that everything is well defined in terms of responsibilities and get-outs.

Would you present to end clients as part of their organisation or would the end client be aware that you're a third party?

There will be two contracts back to back and you need to be careful about where risks fall.

[MagicalTrevor]

Thanks, I've done some research since and it's much clearer now.

[Pit Pony]

My current contract states that my ltd company is liable for any mistakes I make (Hence the Professional Indemnity Insurance). It also states that I can sub-contract my work (with a few clauses about proving to the client that my subcontractor is technically capable), and that my ltd company would bear liability. If I were to subcontract any work (unlikely), I'd copy the parts from my contract with my client, and pass that liability onto my supplier, who I'd expect to have similar professional indemnity insurance.

[MagicalTrevor]

From what we've discussed so far they just want to make sure that I'm covered so they don't put themselves in a situation where they'd become liable.

[insurance_jon]

check your insurance allows you to sub contract. Essentially as you are billing the client for the sub contractors services you are liable, however this can, and probably is covered by your insurance. just check first