3 Myths About Third-Party Contracts Third-party contracts are common in today’s business world. Many companies choose to contract work to outside professionals to try and save money on payroll and benefits costs, and those contractors then subcontract out tasks to do the same, which creates a third-party contract in which the original employer and the subcontractor performing the work may not know about each other. Although third-party contracts such as these can be useful in many situations, it is important to be informed and educated before entering into one. There are a number of common misconceptions about these contracts, and a lack of knowledge regarding the facts could lead to you being liable for a third-party worker’s damages, injuries, or errors. Before you enter any third-party contracts, consider the following three common myths: They protect you from legal action – While businesses may think they are protecting themselves by contracting and subcontracting out work, this is not the case. As long as a company is benefitting from a contract, even if it is through a subcontractor of another contractor, it is still considered a beneficiary of that agreement and can therefore be held liable for any damages. They free you from all employer responsibility – Although third-party contractors are not technically your employees, there is still a chance that you could be deemed their statutory employer in court. If this were to happen, you would be liable for any injuries or damages they suffered while working for you. A breach of contract will not affect you – If you have a third-party contract and either your contractor or their subcontractor reneges on their side of the agreement, you may be able to seek damages for breach of contract. You will need to prove that you are the beneficiary of the contract and that the breach caused you injury or financial damage. If you are considering entering into a third-party contract or are unsure of how your current third-party contracts could affect you, contact de la Riva & Associates today. We will help to ensure that you and your company are safe from liability.

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