Every vent fan should be vented to the outside. If I have learned anything from watching renovation shows on t.v. and from my own renovations is that fans should always vent outside.

He's a bum. Get rid of him.

Like everyone else said, they should vent outside. When ours was installed somewhere between 1971-2001 it was not vented outside. We plan to fix that once we redo our master-bath room that doesn't even have one.

NKBA guidelines
Bathroom Planning Guideline 26: Ventilation
Recommendation: Plan a mechanical exhaust system, vented to the outside, for each enclosed area.

Code Requirement: Minimum ventilation for the bathroom is to be a window of at least 3 square feet of which 50 percent is operable or a mechanical ventilation system of at least 50 cubic feet per minute (CFM) ducted to the outside.

Here is a link that might be useful: Rest of guidlines

How big is your attic and does it have plenty of ventilation to the outside?

Ours is very large and has quite a few vents to the outside, both on the roof and under the eaves.

When it was time to change our fan, we replaced the old duct with what the fan manufacturer required and did not vent it to the outside. Our thinking was that 1-It's very open and vented up there and 2-there were ZERO signs of any damage from the old fan being used for 15+ years.

If your attic is small and not well ventilated, the fan should definitely be vented outside.

When we bought our house, we had to replace all the plywood roof decking because excess humidity had caused it to delaminate.

You don't want to muck around with humidity in the attic. The fan exhaust doesn't go through the soffits; it goes through the roof. Your contractor is lazy and either ignorant or a liar.

thanks for the input everyone. it just didn't sit right with us. we will be standing our ground about venting it to the outside and away from the soffit. i would say the attic area is not very large. the upstairs was the attic, but it has now been finished. all the ceilings slope on the second floor. the attic is just enough room for the duct work to pass. i can't really say how well ventilated it is.

we actually aren't required to get any permits for this work. i was in disbelief too, but i checked myself. also, the room does have windows so we technically meet code without even having the exhaust fan.