Posted by JR Olson | Posted in Business | Posted on 29-07-2016
As a business owner, whether large or small, you are sure to have commercial contractors that you rely on to provide you with internal and external services. This could be anything from facilities and maintenance to inventory delivery or products and services that you require for your day-to-day operations. When your commercial and vendor contracts are not well written, it can lead to disputes and financial loss. Before signing a contract with outside parties, consider the tips below.
Clear and Specific Responsibilities and Expectations
It is imperative that all of your contracts clearly state the specific services, job duties, and responsibilities required of both parties in order for work to be complete. This includes time frames and exceptions to the rules. For example, if you have a commercial contractor who will provide services for your company every Monday, you need to identify how service will be modified on three-day holiday weekends. Also identify how communication will be provided if either party is unable to fulfill their job duties in the specified timeframe.
Terms of Billing and Payment
One of the advantages to having a contract is locking in prices. However, there are many situations that can arise in which a vendor bills more than was agreed upon in your contract. For example, if your maintenance provider has agreed to perform maintenance during general hours of operations for a flat rate, they may charge higher prices for after-hour, weekend, or last minute services. It is essential that both parties clearly understand what the billing will be for extenuating circumstances, or for services above and beyond the general contract. It is also important to determine what payment methods your contractors accepts, their frequency of invoicing, and the frequency in which you make payments.
Ability to Upgrade or Downgrade
Sometimes the contract you sign with a vendor no longer fits your needs, which requires you to upgrade or downgrade your services. For example, if you have experienced a large growth spurt and need to increase the frequency of service provided, you may be required to sign a new contract altogether. While most of your vendors will gladly upgrade your services, your new contract may require different terms and conditions. It is important to understand what upgrades are available and if your vendor is able to grow with your organization as you grow. On the flip side of this, if you have changed your business structure and no longer need your vendor services, or if you need to significantly reduce your services, ensure that you understand what options you have for downgrading your services.
One of the many advantages to signing a contract with an outside vendor is ensuring that the service or products they provide will give you the consistency you desire. However, there are situations that arise in which you may need to terminate your contract. Before you sign your contract, ensure that you understand termination procedures. Usually, termination procedures require a minimum amount of notice, a termination fee, or proof that your commercial vendor is no longer providing you with the level of service you expect.
Sometimes it is easy to become so focused on crossing things off of your to-do list that the details of vendor agreements and contracts fall through the cracks. Prior to signing any contracts, you may also want to enlist the expertise of your legal advisor.
Henry Triton writes on Business Law, Commercial Litigation, Contracts, Sexual Abuse of Children, Personal Injury and other complex legal subjects.