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Let's say there's something like this in the contract:

"Without the prior written consent of the other party, no party shall disclose any Confidential Information to any third party"

Does this mean I cannot outsource to a ghostworker? I know that independent contractors should have the freedom to complete the work in whatever way they want, and that outsourcing is a somewhat common thing to do. Plus that many contract templates will have that clause so I need to make sure.

If not, what sort of clauses in an independent contract will ban outsourcing?

2 Answers 2

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No

You can outsource if you don't disclose Confidential Information (as defined in the agreement), or if you have the principal's permission to disclose it to the third-party contractor. The clause only applies to confidential information - a subset of all information.

I know that independent contractors should have the freedom to complete the work in whatever way they want

Not at all. George Clooney, the actor, is an independent contractor - he can't outsource.

Of course, this is an example of a personal services contract but, more generally, while the starting position in contracting is that either party may delegate their obligations (although they remain responsible for them) the parties are free to structure their contract however they like. If they want to prohibit outsourcing, they can. If they want to specify that certain personnel must be used (or not used), they can.

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  • Ok, so what if the contract doesn't specify what counts as confidential? Would I need to double check with the client or assume that ALL is confidential? Also, would I need explicit consent from the client to outsource (some clients don't expect outsourcing to happen at all) or just making sure that outsourcing is not banned is sufficient?
    – No Name
    Commented May 11, 2023 at 22:31
  • Very good questions - I don’t think they’ve been asked before. You should do so.
    – Dale M
    Commented May 11, 2023 at 23:14
  • If the contract doesn't specify a definition, then anything not marked confidential is not confidential. Commented May 11, 2023 at 23:41
  • @MichaelHall not at all true. On that basis, no verbal communication would be confidential.
    – Dale M
    Commented May 12, 2023 at 3:51
  • @DaleM, since it is not possible to physically mark verbal communication it should be obvious the comment is intended to apply only to work products capable of such markings. The point is that the classification level needs to be communicated clearly and mutually understood. Commented May 12, 2023 at 18:25
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Are you outsourcing to a person in your country, that could easily be held legally and financially responsible for a breach, and do you make them sign a contract checked by a good lawyer? In that case, if your client agrees, you might be fine. Still, the client can hold you responsible for any damages caused by the breach. You can’t say “it wasn’t me, it was my outsourced contractor” - your client will want money from you, and you are free to go after the outsourced person or company.

Someone in a foreign country, paid peanuts - don’t expect them to follow an NDA that you cannot enforce. Outsourcing in that situation would be very, very risky for you.

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