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Without a doubt, this is the best time to review your contract language and make the necessary changes that will best position your snow and ice management operation for the real and potential challenges of Winter 2020-21.
A snow and ice contract is going to feel different to a contractor every year based on the previous winter season and current world events – such as the COVID-19 pandemic -- that impact a business and the ability to turn a profit, says Attorney Josh Ferguson, Partner and Co-chair of Freeman, Mathis and Gary LLP’s Philadelphia and Cherry Hill offices.
“I can promise you that when you read through your contract now, post pandemic, your going to see things that jump out at you,” says Ferguson, a frequent Snow Magazine contributor and legal counsel to the Accredited Snow Contractors Association (ASCA). “Contracts are living, breathing, and changing based on what we see happening, and you need to be addressing [your contract language] at least on a yearly basis.”
The ways to address any red flags in your winter service contract is either through a new agreement or through an addendum – language added to the contract. Both options will require contractors to discuss the new terms with clients. “It will likely be a bit of a give-and-take,” Ferguson says. “Just like negotiating anything else that’s in an existing contract.
“Obviously, you want it to benefit you the most as a contractor,” he adds. “But if you have to give a little to receive some additional protection on your side, then that’s something you may have to do.”
For this coming winter, contractors want to keep a close eye on pricing terms, termination of service clauses, and a force majeure clause, language that frees both parties from liability or obligation when an extraordinary event or circumstance prevents one or both parties from fulfilling their obligations under the contract.
“These can really impact what a contractor can and can’t do, both in terms of performing the actual work and in terms of getting paid for their services or paid for their contract terms,” Ferguson says.
While snow contractors may believe they’re in a relatively good position with their existing contract language, Ferguson says property owners and managers are having similar conversations about how they’ll react to a second COVID-surge scenario, which some health sources have predicted for this fall or winter. And chances are good property owners/manager will approach snow contractors with contract language addendums or new service agreements that are favorable to their financial and business interests.
“You need to be prepared for the fact that the other side (property owners and managers) will likely be making some changes on their end,” Ferguson says. “And you need to be reviewing these contracts very carefully so it doesn’t put you in an unfair position should a second wave of the pandemic or a different issue arise.”
Receiving a property manager’s/owner’s contract isn’t a deal killer, Ferguson says. Rather, it’s an opportunity to address and negotiate terms more favorable to the snow contractor in areas such as: scope of work; defense and indemnity language; as well as pricing terms; termination clauses; and force majeure clauses.
In addition, as snow and ice management professionals, Ferguson says contractors should not only be taking a pen to client contracts, but they should be adding addendums to the contract that more properly define the scope of winter services they will perform.
“We often use [an addendum] as a negotiation tactic to attach our scope of work as an exhibit to the contract,” he says. “And then [in the addendum] incorporate some of the protective liability limiting language that you already have in your base agreement. We find this to be the most successful way to get terms into a contract versus trying to add them in to [the client’s] original [contract] language.”
At the very least, Ferguson recommends contractors review their contracts with their legal counsel prior to sending them to clients for consideration. In addition, contractors should review with counsel any red flags that could be addressed with an addendum.
“The question becomes, are you able to identify and correct these [contract issues] internally, or do you need to reach outside for assistance,” Ferguson says. “If you see a red flag issue, or you’re unsure about something in your contract language, then reach out to legal counsel. That’s certainly something I handle for ASCA members and snow and ice management professionals throughout the US on a routine basis.”
Mike Zawacki is editor of Snow Magazine.