Legal Question in Business Law in New Jersey

I have the clause BELOW in my subcontractor contract. I am an IT consultant and have an S-corp with myself as the only employee.
Lets say I start work at a client and work there for one month and the client tells me to leave. Since I worked there for a month, I should atleast get paid for the month. Can the clause below allow the client to NOT pay me for the one month that I worked?
11. Warranty of Performance. Subcontractor warrants that its services will be of professional quality conforming to generally accepted data processing practices and agrees to indemnify, defend and hold harmless 3i Infotech from any loss, claims, damages, expenses incurred/suffered by 3i Infotech as a result of any failure, omission, errors or delay in the performance of services by Subcontractor.

Asked on 11/29/09, 5:27 pm

2 Answers from Attorneys

John Corbett Corbett Law Firm LLC

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That clause doesn't deal with payment. It has to do with your performance and it is very onerous. Essentially, it warrants not only that you will do the contracted work, but if anything goes wrong with the work, including things that you cannot control, you will pay for any damage that the problem causes. You should think long and hard before agreeing to that. For example, let's say that you have to rewrite the software because it is not compatible with a new release of Java. This causes a three week delay in delivery and, as a result, your customer loses a contract that you know nothing about. This clause requires you to pay damages to them for the profit that they would have made from that contract. I wouldn't work under those terms.

See also: http://info.corbettlaw.net/lawguru.htm

Answered on 12/05/09, 9:11 am

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