exali Glossary
Your encyclopedia of technical terms used in the insurance industry
The insurance industry is full of technical terms—from insurance policies and obligations to recourse claims. To help you keep track of everything, the exali glossary explains the main insurance terms in a simple, understandable, and practical way.
In the exali glossary, you will find not only definitions, but also practical examples, legal information, and references to the appropriate insurance coverage. This way, you always know where the risks lie—and how to protect yourself against them.
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Work Contract
A work contract is a civil law contract pursuant, in which the contractor undertakes to deliver a specific work—i.e., a finished result. In return, the client undertakes to pay a fee.
In contrast to a service contract, it is not merely an activity that is owed, but a verifiable result – for example, functional software, a finished logo design, or an installed server.
Features of the work contract
- Results-oriented: The focus is on the success of the work, not just on taking action.
- Acceptance required: The client must accept the work – that is, check it and confirm that it complies with the contract.
- Liability for defects: The contractor is liable for defects and must, if necessary, make improvements or pay compensation.
- Remuneration: Payment is usually made only after acceptance – often with prior agreement on milestones or partial payments.
Examples of work contracts
- An agency creates a website, including design and functionality.
- A freelancer delivers a customized software solution with a precisely defined range of functions.
- A photographer creates images for a product—the selection and final editing are part of the contract.
- A designer creates a logo that must meet certain requirements.
Liability in a work contract
In a work contract, the contractor is liable for the work being free of defects. If there is poor performance, delays, or consequential damage to the customer (e.g., loss of revenue due to a non-functioning website), the contractor may be liable for damages.
Classification as a work contract is particularly common in project work and IT services, even though hybrid forms involving service contracts are also frequently encountered.
Work contracts are a popular means for companies to circumvent temporary employment (keyword: temporary work). Instead of hiring their own staff, a project or assignment is awarded as a work contract.
Withdrawal from the work contract by the client
When a work contract is withdrawn from, the initial situation is usually restored. This means that the client must return the services received or may not use them. The contractor (freelancer) must repay the payments received and outstanding invoices are canceled. This means that the client's withdrawal from the contract for work and services poses a major risk for freelancers. Not only are they left with the costs for personnel, materials, administration, and office expenses, but they also have to repay the wages.
The professional liability insurance policies offered by exali.de cover activities based on both a work contract and a service contract.
Term: Work Contract
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