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It pays to play by the rules

By:
  • Darryl Beckman
- Posted: July 24, 2016
This column offers a brief discussion of the importance of understanding and managing risk in hiring and using subcontractors and working through contractual issues that are crucial to the operation and profitability of any snow and ice company.

Contracts

Subcontractors can be essential in expanding and growing a snow and ice management company. Without exception, you must have a contract in place with every subcontractor. Do not permit any subcontractor to perform services for you without executing a signed and written contract. The contract should, at a minimum, specify what services are to be performed, when the services are to be performed and the responsibility for inspection and monitoring.

The scope of the contract must be clearly and unambiguously spelled out in the contract. This is as much a requirement for successful operation of your company as it is a legal requirement. In any business, and especially a business as competitive as snow and ice management, you must strive to ensure your customer is fully satisfied with the services you and your subcontractor provide.

Know your liability

Legally, you are potentially responsible for deficiencies in the work of your subcontractor. Practically, your customer will hold you at fault for any improperly performed work.

Provide all subcontractors with a written document outlining specific job requirements for all locations the subcontractor is servicing. I regularly defend legal cases in which there  is confusion and ambiguity concerning the expected services, which are not performed to the satisfaction of the property owner or management company. The end result is often the loss of the contract, the loss of a valued customer, and frequently litigation arising from damages due to improper service.

Fundamentally, any agreement must specify when snow clearing and deicing services are to begin. This is absolutely essential to any contract. Although this sounds simple, the trigger or starting point for services in the agreement with your subcontractor should be identical to the trigger or starting point for services in the agreement between your company and your customer. It is surprising how often I see subcontractors required to begin snow clearing as a different level of accumulation than that noted in the original contract for services with the property owner or management company. Any discrepancy in expectations for when snow clearing and deicing services are to be initiated is destined to lead to significant confusion and potential liability.

The most common trigger for initiation of snow clearing services is a set accumulation, frequently 2 or 3 inches of snow. Many contracts now contain a zero threshold, requiring services whenever the snow and ice management company believes services are necessary. The benefit of a zero threshold contract is the snow and ice management company is essentially permitted to service at its discretion to keep the premises clear of snow and ice; but understand with this discretion comes greatly enhanced potential liability. Under a zero threshold contract, the snow and ice management company and the subcontractor performing services may be legally responsible for any dangerous condition of the premises arising from a failure to clear or treat snow and ice. Basically and without exception, no matter what the agreed-upon starting point or trigger, there must be an expressed trigger for services in the contract.

Similarly, the contract must contain language establishing level of deicing services. The language must clearly identify the expectation for and permissibility of deicing services, including pre-storm and post-storm applications of ice melt product.

Clearly define terms

Many property owners and management companies attempt to control costs by limiting pre-storm and/or post-storm treatments. There is no prohibition against a customer trying to reduce costs by limiting treatment, but to protect your company from potential legal liability, and to avoid later disputes with your customer and your subcontractor, ensure the terms of your agreement are clearly spelled out in the contract. Do not accept a contract from your client, or request a subcontractor sign a contract, if there is any ambiguity about services.

I frequently discuss inspection and monitoring responsibility in my columns and in my legal practice. The agreement with your subcontractor should reflect whether your company or your subcontractor is responsible to inspect the premises before services are considered complete and the subcontractor leaves the premises. There must be no confusion on this area, as you do not want the subcontractor to argue it relied upon your company for inspections, unless you are actually inspecting the subcontractor’s work before the subcontractor is released from the premises. Similarly, the responsibility to monitor a location on the days following completion of services must be spelled out in a clear and unambiguous manner. Contractual responsibility for inspection and monitoring is crucial when confronted with litigation arising from personal injury suffered in a slip and fall days after a snow event.

Subcontractor subcontracting
The agreement with your subcontractor should reflect whether the subcontractor is permitted to subcontract any snow clearing and deicing services. The subcontractor agreement should require the subcontractor defend and indemnify your company from all claims and litigation arising out of the subcontractor’s performance or failure to perform required services. The agreement should expressly require the subcontractor assume responsibility to repair any damage caused by the subcontractor’s employees.

Finally, an extremely important part of any contract is a requirement for liability insurance coverage. Before allowing any subcontractor to work for you, request and secure proof of valid and effective insurance coverage for the subcontractor. To the extent possible, verify coverage by demanding a certificate of insurance, and require that the certificate note that snow clearing services are covered. You should also require all subcontractors to identify your company as an additional insured on a policy of insurance. 

Darryl Beckman founded Beckman Roth Ogozalek, which has offices in New Jersey and Pennsylvania. Contact him at darryl@beckmanlawgroup.com.
 
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