“Contracts, Contracts, Contracts – Five Common Mistakes to Avoid”

Sandra Pfau Englund

 

Contracts, Contracts, Contracts:
Five Common Mistakes to Avoid

Association executives routinely deal with numerous kinds of contracts. Meetings require hotel contracts. Membership, administrative and other systems require computer hardware and software agreements. Publications require copyright agreements. Hopefully all will go well and no disputes will arise. When disagreements do occur, however, it is essential that the contract protect the association, not just the vendor. Following are five common mistakes that are made in contracts and how to avoid them.

  1. Failure to negotiate. When faced with the vendor’s “standard form contract” read the fine print and attempt to negotiate out unfavorable clauses. Do not automatically assume that you must sign the agreement as is.
  2. Failure to understand. If you do not understand a provision, find out what it means before signing. Vendor contracts frequently attempt to disclaim any warranty of merchantability and of fitness for a specific purpose. These warranties are often exactly the type of “guarantee” that you need.
  3. Lack of specificity. When contracting for customized services, such as computer software, be sure to carefully draft the specifications for the customized services. If there is a dispute, you only can rely on the specifications as written in the contract; you can’t rely on what you thought the customized service would do for you.
  4. Lack of deadlines and penalties. When contracting for services it is critical that you include specific timelines for completion of the work. It is a good idea to have a payment schedule based on identifiable deliverables, and to attach penalties if deadlines are not met.
  5. Failure to require parallel liability clauses. Vendors, hotels and others frequently will attempt to place all legal liability on the association. Instead, liability clauses should be parallel, placing responsibility on the vendor if its employees are negligent, and on the association if the association is negligent.

Copyright © 2002 Sandra Pfau Englund. All rights reserved.



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