Simple mistakes sometimes result in costly lawsuits. The following discussion is based on actual claims, and although the situations are real, I changed the names the protect the innocent.
Two snow and ice companies operated under very similar names in the same general area. The companies had no affiliation whatsoever, and although the owners of the companies occasionally discussed changing the name of one of the companies, they never agreed upon taking this action. When a lawsuit was filed against the wrong the company, based upon an erroneous reading of the contract for services, the wrong company realized the error and decided to throw away the suit papers.
Many months passed, and the wrong company took no action, since the suit papers were in the trash can. A default was eventually taken against the wrong company, creating the potential for a monetary judgment. Since the wrong company failed to place its insurance company on notice of the claim, there was no insurance coverage for the potential judgment.
Luckily, we were able to clear up the situation, and have the correct company identified in the legal action. The delay in responding to the suit papers, even though the papers were incorrect, caused the wrong company a significant amount of time and expense in escaping to securing a dismissal from the legal action.
After spending three years working hard to secure the contract for snow clearing and deicing services at Happy Valley Plaza, Fuss was exuberant, and did not take the time to carefully review the contract. A typographical error in the contract incorrectly required snow clearing services begin at 1 inch of accumulation, instead of 2 inches of accumulation. The parties to the contract clearly understood services were to begin at 2 inches of accumulation, but the error created significant confusion when a claim was presented arising from a slip and fall on a day when there was an accumulation of snow just under two inches.
Courts will generally not enforce a misprinted clause in a contract, but there was no way to prove this clause was erroneously typed. The property manager was, however, honest and admitted the error, and Fuss was not held responsible for the claim.
Harkins Snow & Ice worked at Catlin Commons for 10 years, and was a valued contractor. Caitlin Commons recommended Harkins to a neighboring property owner, who was also extremely pleased with Harkins services. Word of mouth spread, and Harkins was eventually servicing 50% of the properties in the area.
Harkins engaged in a process during the summer months to hire subcontractors to assist with snow clearing and deicing. On the first storm of the season, due to an error in communications, three of the subcontractors showed up at the same site, and there were two sites without service for almost a full day.
When the error was realized by Harkins, the sites were properly serviced and the property managers had no complaints, especially after Harkins reduced the invoice for services by 10%. Nevertheless, the possibility existed of a significant legal claim arising from a potential injury suffered on an untreated job location for a day, and there could have been trouble for Harkins and the property managers. As your business grows, it is important to have adequate contact with subcontractors and property managers, and avoid what may seem like silly errors.
Due to an error in communications, Uncle Oggie’s snow clearing company plowed snow to the wrong area of the parking lot. When Elizabeth came out of the bar late at night after many drinks, she walked into the pile of snow and ended upon the ground. Elizabeth’s intoxication was clearly a factor in the accident, but Uncle Oggie’s failure to push the snow to the proper location also played a part in the accident. Thankfully, Elizabeth’s injuries were extremely minor and the claim settled very quickly and for a very small amount. The possibility did, however, exist that the error could have led to much greater litigation. Communication is important, especially when it involves actual performance of snow clearing operations.
Kendra and Skowron were next door neighbors, and operated rival snow companies. When they decided to work together on a couple of extremely large projects, everything went extremely well, and they discussed merging their companies. The new company also did extremely well, but when one of the partners decided to sell, it was discovered the corporate agreement did not discuss how the business would be valued. It seems Kendra and Skowron never anticipated the possibility one would eventually want to sell a share in the business, and their attorney failed to anticipate the scenario. Kendra and Skowron were able to work out a fair price, but in many situations, a dispute among partners leads to a nasty end to a successful business. Kendra and Skowron should have used separate attorneys when drafting the agreement for operation of their new business, as opposed to the same attorney. Separate attorneys would have looked out for the individual interests of Kendra and Skowron, and the potential for a dissolution of the business would have likely been included in corporate papers.