Background:
My Pty Ltd company has just won business with a new client to build a new IT project as well as a managed service contract.
Recently, the CEO of the client has experienced an issue with an old supplier whereby they went bankrupt and the client lost their spendings along with not having the project completed.
In a separate matter, they have had problems with the supplier we are replacing.
The Issue / My Question:
Understandably, said client is currently somewhat cautious with new agreements. In our case, it seems we are paying for the poor actions and bankruptcy of others.
The client is drafting through their legal representation an agreement which to my understanding is asking for myself (MD of my Company) to provide a personal guarantee in the event of issues similar to above.
I have fully complemented PI and Public liability Insurance for our line of work (far exceeding tbh, and covering consultancy as well). My business is structured in such a way as to minimise risk by utilising a trust and company structure.
1. Is it legal for another business to request a personal guarantee / waiving of rights in the event of mishap, non-delivery, financial etc. for a B2B contract?
2. Is this not what my business insurance is for?
3. Is this a standard practice in some cases?
I'm extremely concerned by this. I have no issue standing behind our service delivery and the piece of work is completely routine for us.
My Pty Ltd company has just won business with a new client to build a new IT project as well as a managed service contract.
Recently, the CEO of the client has experienced an issue with an old supplier whereby they went bankrupt and the client lost their spendings along with not having the project completed.
In a separate matter, they have had problems with the supplier we are replacing.
The Issue / My Question:
Understandably, said client is currently somewhat cautious with new agreements. In our case, it seems we are paying for the poor actions and bankruptcy of others.
The client is drafting through their legal representation an agreement which to my understanding is asking for myself (MD of my Company) to provide a personal guarantee in the event of issues similar to above.
I have fully complemented PI and Public liability Insurance for our line of work (far exceeding tbh, and covering consultancy as well). My business is structured in such a way as to minimise risk by utilising a trust and company structure.
1. Is it legal for another business to request a personal guarantee / waiving of rights in the event of mishap, non-delivery, financial etc. for a B2B contract?
2. Is this not what my business insurance is for?
3. Is this a standard practice in some cases?
I'm extremely concerned by this. I have no issue standing behind our service delivery and the piece of work is completely routine for us.
