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A flurry of contract questions

  • SIMA
- Posted: April 1, 2014
I recently participated in a presentation to snow-clearing professionals at Rutgers University in New Jersey. The focus of my presentation was avoiding liability for snow-clearing services, and although the presentation covered an array of topics, the following discussion covers what appeared to be of greatest importance to those in attendance. Names have been changed to protect confidentiality.

Scenario 1: Troy Smith LLC performs snow-clearing services in the Minnesota area. Winters are usually harsh, and snow stays on the ground for many months. Smith has a new customer who’s unwilling to pay for hauling snow off the site of a small retail shopping center. Smith is running out of space to push the snow, and is concerned the snowfall from a large storm will result in an inability to properly service the location.

Smith requests permission from the management company to haul snow away for a reduced price, but it refuses. Smith must develop a plan for handling a significant storm event, including choosing where to pile snow and circumvent a potential melt and freeze problem, since he can no longer store the snow in the distant corners of the parking lot.

My Advice: I suggested that Smith express his concerns in writing to the shopping center’s management, and, to the extent possible, ask if it will release him from the contract. Smith is not in business to lose or give away customers, but it makes no sense for Smith to be placed in a position where he’s unable to properly perform his contractual duties due to a lack of cooperation. 
Scenario 2: K. Paul & Sons is under contract to service the Zurich Plaza in Philadelphia. The location is next to a large street, and municipal trucks constantly plow snow onto the plaza’s sidewalks, many times long after K. Paul completes services.

K. Paul does a thorough job performing his initial clearing services, yet he constantly receives complaints from the plaza’s management company. K. Paul has attempted, to no avail, to address the issue with the city. While the management company is sympathetic to K. Paul’s predicament, it says K. Paul is contractually responsible for the entire premises, including the sidewalks abutting city streets. 

My Advice: Unlike the previous scenario, I did not recommend K. Paul attempt to escape his contract. K. Paul simply must go to the extra expense of clearing the sidewalks after the city’s trucks perform their plowing operations. When the contract comes up for renewal, K. Paul should price the cost of additional services into the new contract, but for now K. Paul is obligated to honor the existing terms.
Scenario 3: Hometown Shopping Center houses two major department stores and many smaller businesses. Losey Snow & Ice is expected to constantly monitor the premises for melt and freeze, as the shopping center is extremely serious about creating a safe environment for its customers. Losey is paid for all monitoring services, including days after snow events.

A legal claim arises from a slip and fall seven days after a snow event. The investigation reflects that the ice formed because of a clogged drain. It’s important to note that Losey had no knowledge of the clogged drain and ice formation before the accident.

My Advice: I offered the preliminary opinion that Losey will not be liable for the accident, but this is a close call. Losey was authorized, contractually obligated and paid to monitor the site. The shopping center has a high expectation that Losey will keep the premises free and clear of snow and ice. My opinion that Losey will not be liable is based on the fact that Losey had no knowledge of the drain clog before the occurrence, and there were no weather conditions that gave Losey a reason to inspect the shopping center when the incident occurred.
Scenario 4: C. Decker was instructed to perform no services without prior approval. C. Decker took the job because it is a new company trying to establish itself in the region. Once the snow season started, C. Decker realized that the inability to service until receiving approval resulted in the premises being in extremely poor condition once C. Decker was allowed to service. After the third storm of the season, C. Decker realized the mistake of agreeing to such a contract.

My Advice: It’s almost always a terrible idea to agree to a contract where you’re not permitted to perform any services without receiving prior authorization. In my experience, a property owner requiring such a contract is under extreme financial pressure to limit the cost of services, and the job will become very difficult for the snow-clearing company. I always recommend a pre-agreed upon trigger for the initiation of services, allowing a comfort level for both the contractor and the property owner. 

Darryl Beckman founded Beckman Roth Ogozalek, which has offices in New Jersey
and Pennsylvania.
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