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05/01/2004
Chairman’s Message
At the recent NATE event in Nashville, there was a lot of talk spurred at one of the educational sessions on contractual risk transfer. The presenter, Robert Moore with Stone & Moore, Chartered, emphasized that member companies need to be very cautious in signing contracts where one party has attempted to transfer all the risk of liability to the other party. As contractors you know who tends to be the one on the losing end of this proposition.
Several people came to me after the session to voice their concern that by NOT signing the contracts their stream of work would dry up and their company would suffer if not fail. Others vented that we have too litigious a society and why can’t we just go do the work at hand and forget about all the issues with liability and legal entanglements. I would like to take the opportunity of this article to articulate my advice on these matters. It would be my hope that the members of NATE might use this counsel to their advantage in negotiating future contracts.
1. First and foremost, remember that without you and others like you the work your customers need done cannot be accomplished. You may not feel you have any power with your customer, but don’t sell yourself short. Of course a little solidarity and unity in purpose among the ranks of tower service companies along these lines goes a long way. But don’t wait for someone else to lead out, seize the day yourself and others will follow.
2. When presented with a lengthy contract where language is too difficult for you to fully understand, seek the professional advice of an attorney. Let them advise you on the language that could come back to bite you later.
3. Present your contracts to your insurance carrier or agent for their review. If you’re not sure yourself, it is important that they review it to ensure that the language in the contract does not go outside the bounds of your policies.
4. Don’t be afraid to red line the contract to delete unacceptable clauses. If the clause is completely unacceptable, use a red pen to put a box around it with red lines from corner to corner. Then initial next to the box.
5. Often big red boxes with an X through them are not popular with your customer. Whenever possible insert alternative language in the margin that makes the clause in question more fair to both parties. If necessary, you should consult your attorney or insurance carrier for help with alternative language.
6. When you find that the entire clause is not a problem but you have issues with a certain part of the clause, use the same red pen to line through the unacceptable part. You can often do this without even changing the flow of a sentence.
If you have never had a legal liability issue bite you, then all of the above may seem like a waste of time. You might think that it isn’t a big deal, "just sign the contract and let’s get to work"! This thinking is correct in one sense; contracts are unnecessary if nothing goes wrong during or after the work, which we hope most of the time is the case. But as soon as someone is hurt, the job goes overtime, change orders occur, an employee is aggrieved and sues or a myriad of other reasons, then the contract comes out and one party or the other is looking for language to exonerate themselves from liability. When this happens, it is comforting to know that you reviewed the contract in advance and understand it. When you under-stand the contract in advance you are more likely as a manager to manage the job to avoid pitfalls that could adversely affect your company.
Once again, my message to the members of NATE is, don’t be afraid to negotiate a contract to more fairly represent your interests. If a customer takes you from their qualified contractor list because you are trying to make the contract more fair, do you really want to work for that customer anyway? The choice is yours; my advice is to choose in advance to make your contracts equitable for both parties.
Until next month, be safe!
By: Craig M. Snyder, NATE Chairman
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