I have practiced law for over 25 years, and spent the majority of that time in representation of large and small snow and ice management companies. More than any other question, I am asked about contracts for snow clearing and deicing services.
The contract is, very simply, a document setting forth the written agreement for services. The contract should list a start date for services, along with a date where the contractual agreement is concluded. The contract should also list the services to be performed, and set forth the pricing for the services.
Twenty years ago, contracts were very basic, and most contracts were essentially the same. Within the past ten years, very complex defense and indemnification clauses emerged in contracts, and I have addressed those in numerous columns. Within the past three years, specialty clauses have emerged. The purpose of this column is to discuss specialty clauses, to give owners and operators of snow and ice management companies a general idea of clauses they should consider adding to their contracts, and clauses they may want to be wary of if requested by property management companies and sophisticated commercial clients.
Extra Expenses – snow and ice management companies are starting to add clauses protecting them from extra expenses associated with performing services. These extra expenses can arise from unforeseen weather events or a change in philosophy towards snow clearing services by the company managing the premises. The purpose of a clause for extra expenses is simply to protect the snow and ice company in the event of a drastic change in expectations. A clause of this type is generally associated with a contract calling for a flat seasonal fee, as opposed to a contract paying per service, as discussed below.
Flat Fee vs. Per Service – years ago, the vast majority of contracts I saw were per service contracts. Very simply, these contracts paid snow and ice management companies for the services performed. In a slow winter season, snow and ice companies made less money, and in a season with a lot of storm activity, snow and ice companies made more money. In an effort to control costs, sophisticated corporate clients and large snow and ice management companies migrated to flat fee contracts. These contracts allow certainty, as they dictate a set monthly or annual sum paid to the snow and ice management company, regardless of the amount of actual snow clearing and deicing services performed. In a flat fee contract, it is helpful to include a provision for extra expenses, although large corporate customers may not be willing to agree to same.
Limitation of Liability – many large corporate customers are demanding snow and ice management companies agree to accept any and all liability arising from snow clearing and deicing services. This is becoming fairly standard in contracts for corporate entities such as big box retailers. My advice when faced with one of these contracts is to agree to same if it makes business sense, but never agree to accept responsibility for the negligence of your customer, unless you are extremely well paid to assume this risk.
In a reversal of the above, snow and ice management companies are starting to incorporate specialty clauses requiring their customer agree to defend and indemnify the snow and ice management company for any claims. These clauses are usually utilized in the context of slip and fall claims arising from melt and freeze situations occurring days after services are performed. The essence of these clauses is simply to place the responsibility on the property owner or management company to contact the snow and ice company for additional services if needed, and place responsibility on the property owner to perform inspections of the premises. I strongly recommend any snow and ice company attempt to utilize a clause requiring the property owner to contact the snow and ice company for additional services after initial services are completed, unless the snow and ice company is authorized to return to the job location to perform inspections.
Inspections – as discussed above, inspection responsibility is extremely important. Many property managers do not want to pay for inspections, and will not authorize same on the days following completion of services. There is nothing wrong with a property manager taking this position, but it is extremely important for the snow and ice management company to attempt to protect itself from a condition resulting from melt and freeze days after services are complete, when the snow and ice company is not paid to perform inspections. In this context, the snow and ice company should request the property manager or owner accept responsibility, and defend and indemnify the snow and ice company for any claims arising days after services are complete.
Enforceability – courts will generally enforce a written term if placed in a contract between parties with equal bargaining positions. You can add any of the above discussed clauses to contracts with a corporate customer, and unless the clause is ambiguous and makes no sense, a court should enforce same. You may have difficulty in trying to enforce a clause if the clause is unfair and imposes an unreasonable burden on an unsophisticated residential customer, as courts generally try to protect the consumer. As long as a clause is fair, and the parties have an opportunity to review the clause, the clause will generally be enforced.