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Contract care

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- Posted: October 1, 2014
By Patrick McGuiness
 
With the snow season fast approaching, getting your contract documents finalized is essential. The best contracts clearly outline what both clients and service providers can expect. In this litigious age, a contract cannot simply state when you will plow and how much you will charge; a strong contract must also explain who is liable for accidents or injuries. As a snow service provider, you must pay close attention to your indemnification and release of liability clause.

Indemnification
It has become common for big clients to demand that the snow contractor assume liability arising from snow-clearing and deicing services. If someone slips and falls, the property owners want the snow company to pay the price.  

When your company lands a deal with a big client or major retailer, it can be easy to overlook the fine print of the contract - that’s a big mistake. While clauses shifting liability may seem cheap at the onset, they could be extremely costly in the long run. Before you sign on, be sure you’re being compensated well enough to justify the risk. Keep in mind the potential cost of medical bills, as well as the cost of litigation. Even if you’re not at fault, or ultimately not found to be responsible, getting to that point can cost thousands of dollars in legal fees.

Avoiding an indemnification clause

Many clients are so eager to reduce the cost of salting and deicing that they push contractors to use less salt than is appropriate. The State of the Industry survey found that 23% of snow & ice contractors have reduced their salt use to save money for clients. If you’re using less salt on a job at the request of a client, you should never agree to accept liability for management choices.

How much liability can owners shift?

While you should never agree to accept liability for accidents without careful consideration, not every indemnification clause will be upheld in court. Unless statutes dictate otherwise, courts are more likely to uphold indemnification clauses that are somewhat related to actual responsibilities. For example, if a contract shifts the liability for all slip and fall accidents on a property to a contractor who is only responsible for snow service outside the building, it is unlikely that a court would find the contractor liable for a fall that happens inside the building. After all, they are not providing services indoors, and they have no control over the safety of the area. However, every state has different laws and standards of care when it comes to this topic, so review your contracts with a local attorney.

Have your own indemnification clause
Clients aren’t the only ones who can use indemnification clauses. The State of the Industry found that 27% of respondents plan to include a clause in their contract that shifts liability to property owners who dictate the level of service. These clauses typically apply to situations where snow & ice melt and refreeze, causing slip and fall accidents several days after the initial service. The contract should stipulate that it is the property owner’s responsibility to carry out follow-up inspections and request additional snow & ice service when it is necessary.

Property owners are unlikely to agree to indemnification clauses without debate, so you should decide ahead of time how important it is for you have one on each job. I strongly recommend asking for an indemnification clause if a client refuses to authorize follow-up inspections. If you’re regularly limiting your snow maintenance or salt use to reduce costs for the customer, it’s even more important for you to have a clause in your contract making it clear that the client is responsible for any accidents on the property.

Indemnification clauses can seem like a hassle - they make negotiations more challenging, and the costs and benefits may never materialize. However, when you’re dealing with a big property, where an expensive accident could happen with little warning, it’s essential for you to write a strong contract that protects your business from unnecessary liability.
 
This article provides general information on legal matters and should not be relied upon as legal advice. A qualified attorney must analyze all relevant facts and apply the applicable law to any matter before legal advice can be given. Patrick McGuiness is an attorney with Zlimen & McGuiness.
 
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