Get vendor outsourcing in writing
Published 11/19/04

A vendor may outsource the service it provides your employer and 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. There are three exceptions to this rule: (a) negligence of the company in selecting, instructing, or supervising the contractor; (b) when the work is inherently dangerous, and (c) when the company has a nondelegable duty, such as the duty to maintain a safe workplace or the duty of a building owner to maintain a safe premises.

If your company wants its vendors to be ultimately responsible for its 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, if 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 to a customer like your company. 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 business persons on a variety of legal issues, including employment, and advocating on their behalf. You can reach Attorney Marr by e-mail at: dmarr@hamker.com

This information is general information and may not reflect the most current legal developments, verdicts or settlements. The information provided should not be relied upon as an indication of the actual state of the law or of future developments. The information contained on the Hamblett & Kerrigan website is for informational purposes only and does not constitute legal advice. If the information referenced may be of legal importance to you, you should consult with an attorney to provide you with legal guidance and opinion as the the effect of the current law upon your situation.