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Contract scrutiny

By:
  • Darryl Beckman
- Posted: September 22, 2016
In almost 30 years of practice as an attorney, I have observed contracts for snow and ice management services expand in scope and complexity. During the summer months, before the start of the busy snow season, I suggest carefully reading all new contracts. Ask questions before signing a contract, especially regarding any confusing or vague terms, and make sure you fully understand all contractual duties and requirements. If you encounter any questions or concerns, enlist the assistance of professionals, including your insurance agent and/or attorney. Signing a poorly worded or vague contract can result in significant problems for all parties to the agreement, and it is relatively simple to clear up any confusion before entering into a contract.

Below are contract scenarios that may or may not be familiar to you, along with recommendations on how to handle them appropriately.
Scope of Work: Contractor agrees to abide by and follow the scope of work attached to the document.

Problem
: It’s common to see this scope of work provision without any specifications attached to the contract. Before signing any contract, make sure all attachments are included. If you sign a contract without attachments referenced in the contract, you are agreeing to contractual terms without actually seeing them.

Solution
: A written contract is always necessary. Keep a basic form contract available that out-lines requirements for snow clearing, including when services begin, inspection responsibility, and the price for services.

Expectations: Contractor must provide snow and ice control services and follow-up inspections and maintain a clear, slip-free environment.

Problem: This is not an uncommon provision, but is extremely harsh to the contractor.

Solution: A sample provision is “The contractor will use its best efforts to provide snow clearing and ice control services toward the goal of achieving and maintaining a  clear, slip-free environment to the extent permitted by weather conditions.”
Starting Time: Contractor shall be prepared, at all times, to mobilize equipment and manpower as required to service all locations covered under this agreement.

Problem: This provision essentially requires the contractor provide service whenever needed. The provision is extremely broad and vague, and should not be used.

Solution: A better provision contains a quantitative trigger for services. An example is “Snow clearing and deicing services shall be commenced upon two inches of accumulation.” Most contracts I review utilize an automatic trigger for snow clearing and deicing services, usually upon 1 or 2 inches of accumulation. Measurement of actual snow accumulation should be based upon reporting of an established weather service.
Damages: Contractor shall assume responsibility to repair property damaged while per-forming services under this contract.

Problem: There is nothing wrong with an agreement to repair damages caused by contractor’s employees, but this provision is somewhat vague.

Solution
: I suggest using a provision similar to the following: “Contractor agrees to repair or pay the reasonable cost of repairs for any damage contractor’s employees or equipment may cause to property while performing snow clearing and deicing services under this contract.”
Indemnification: Contractor agrees to assume full responsibility for all injuries or damages, and will indemnify Owner for any and all claims.

Problem: This is an extremely broad provision, and it is almost impossible to know how a court will rule if asked to interpret it. However, it is likely the provision will not be enforced in the contractor’s favor.

Solution
: A clause such as the following: “Contractor agrees to indemnify, defend and hold harmless owner and owner’s employees in connection with any negligent act or omission of contractor and contractor’s employees in the performance of contractor’s duties under this agreement.” There are dozens of form indemnification provisions, and every contract must be read carefully to understand the requirements.
Necessity of Services: It is expressly understood the Contractor is responsible for deter-mining the necessity of performing all services under this Agreement.

Problem: This provision is acceptable, as long as the contractor has the discretion to actually perform services whenever the contractor believes services are necessary. This type of provision will usually be found in a flat fee or seasonal agreement, where the snow and ice professional is paid a set fee regardless of the amount of services performed.

Solution: Do not use this provision if there is a service trigger, as the contractor does not have the ability to service whenever necessary. Similarly, do not use this provision if the owner or management company must grant approval before services are performed.

Inspection: Contractor will visit all locations covered under this Agreement daily throughout the winter season, and will eliminate any hazardous slipping conditions.

Problem: This onerous provision requires that the contractor visit and inspect all service locations every day during the winter and eliminate any potentially dangerous condition. This is an extremely broad provision and imposes harsh requirements on the contractor.

Solution
: I suggest using a less arduous provision, somewhat limiting the inspection requirement to a defined weather event: “The contractor will visit all locations covered under this agreement whenever snow or freezing precipitation occurs and will perform all necessary snow clearing and deicing services.”
Insurance coverage: Contractor will provide Owner with certificates of insurance providing proof of required coverage limits, and shall name Owner and Management Company as additional insureds.

Problem: Almost every contract now contains a requirement that the contractor secure adequate insurance coverage, and name the owner and/or management company as an additional insured. These provisions are fairly standard, and usually no material change to the provisions is required.

Solution: However, it is extremely important the snow and ice professional show the contractual provision to its insurance agent or broker for the business, to ensure the contractor has or procures adequate insurance coverage, and to ensure the agent and/or broker issues the necessary certificates of insurance.
Darryl Beckman founded Beckman Law Offices, a law firm with offices in New Jersey and Pennsylvania. Darryl works for major insurance carriers throughout the United States, and also engages in representation of and consultation for large and small snow and ice management companies throughout North America. Contact him at darryl@beckmanlawgroup.com.
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