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Consider a self-employed web developer whose work is outsourced from another web development company. That developer could be liable for any mishaps and could be sued by their clients. The web development company are willing to accept liability on the developer's behalf (in the same way that they are liable for their employees), but it's unclear to me if a contract that waives the developer's liability needs to include the end client as a party or if a contract between the developer and the web development company is sufficient.

In all but one case, the websites are hosted by the web development company itself. Does the answer differ if the website is hosted and managed by the end client with the web development company (and so also the developer) being granted limited access as needed?

All parties are based in England.

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    This is called an indemnity agreement, and you should get a lawyer involved in drafting one. – Ron Beyer Apr 6 at 20:51
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Employees can be directly liable in England

While the principle of vicarious liability means that an employer is responsible for the acts and omissions of an employee; that employee is also personally responsible. If their negligence causes damage to their employer or a third person, the damaged party can sue them directly.

While such suits are rare outside the realm of healthcare they are a legitimate part of the common law. Part of the reason for their rarity is that the employee can usually rely on the employer’s insurance so since the same insurer is defending or paying the claim it makes no practical difference who the defendant is.

Note that some jurisdictions have put a statutory shield around employees but England/Wales is not one of them.

You should have insurance

If you are an independent contractor in fact (rather than being an employee who is called an independent contractor - see many questions on this site) then you are not covered by your principals insurance.

While I understand that your back-of-house work carries less risk than working in a production environment, it is not risk free. If a piece of code you wrote crashes the server or wipes the database when it goes live, you can be sued by your principal or the damaged third party and your principal’s insurer will be leading the charge.

Indemnities are nice

But ...

What are you going to do when your principal welshes on it?

Do you have the resources to sue them (a process that might take 24-36 months) to enforce the indemnity? What happens if at the end of that the court decides the indemnity is unenforceable? Or the principal has gone bankrupt and you’re just another unsecured creditor getting a penny in the pound seven years from now?

Are you sure that such an indemnity is allowed under your principal’s PI insurance so that their insurer will honour it? They are more likely to pay you if they can recover.

Rather than getting an indemnity, negotiate higher payment for taking the risk and invest some of that in a proper PI policy with indemnities you can rely on.

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This acceptance of liability should be in your Statement of Work or Services Agreement. You should have an attorney review the terms.

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