It’s In the Fine Print

In the course of a year, a manager will likely have to procure several services that will require contractual agreements. Unless you have a degree in law, reading, reviewing, and forecasting the implications of agreeing to these contracts is a challenge. To help meet this challenge, it is important to have these six basic understandings.

1. Always note the length of the contract and the means necessary to terminate that contract. How much of a notice do you have to give to terminate that contract? When and if you need to terminate that contract, does it need to be in writing? Will an e-mail or phone call be invalid? If they fail to perform or no longer can meet your new needs, can you terminate the contract? Do you have a means or ability to demonstrate, or criteria in place, that can prove they have failed to perform?
   

2. Is the contract transferable? You are signing with a company you have just negotiated with, but what if another company buys them out? Can you transfer the conditions of that contract to the new company? In this day and age of takeovers and buyouts, transitions are very common. Another consideration is the basic stability of the organization. You have essentially just become a partner with this new organization; are they stable? If they go away, how will it impact you? Can their services be easily replaced? Do a background check on anyone you are about to enter into a contractual relationship. If they have a history of legal issues, you can find that out with a simple background check with the BBB or other sites on the internet that can provide the history and performance of businesses. It doesn’t hurt to ask them for credit references or ask them if you can talk with any of their current customers.
   

3. Where is the contract going to be executed? You may be located in one state, but the company you are dealing with may operate out of another. This is important in case you come into a dispute, as each state can have different ways of dealing with legal issues. As an example, California requires a service that has a contract that needs to be renewed to contact the signing party in order to have that agreement renewed. That requirement can vary from state to state.
   

4. What is the service like behind this agreement? Do they provide support and guarantees you can count on? How is their response to emergencies or general needs? This is especially important with high-tech products because many companies have large areas of responsibility but only an occasional need for support; as a result, they will hire help when needed instead of having staff on hand to address issues. These companies can be very slow to respond to your immediate needs.
   

5. Can adjustments be made to the contract? Things can change in our industry quite rapidly, and you may need to have an adjustable contract. Consider the future needs of your business in case of growth. Consider changes needed to adjust to new competition or a loss of demand for a product or service. Look at a contract as an investment and do your due diligence before making any long-term commitments.
   

6. Is the salesperson a part of the organization? If the company is hiring a temp or a hired sales gun, their word is not their bond. Many companies will execute surges in their marketing, and what may be promised by a temporary sales rep is often lost when they move on. Make sure you take written notes and record all of your communication with that salesperson. Keep these records, and for that matter, any type of communication with that company on file.

Before signing on the dotted line, stop and take a little bit of time to sleep on your decision. Shop around and make sure you are getting the best deal possible. Don’t be afraid to negotiate. Remember that you are about to commit, so seek out the best deal possible that you can live with over the terms of that contract.

Remember that you are responsible for that contract. A signed contract is a legal document, so you will have to live with what you agreed to as long as you are under contract as the manager. You could still be held personally liable in specific scenarios if you explicitly signed a personal guarantee or added your own name as a co-obligor/guarantor alongside the company name, or if you exceeded authority and signed a contract for services that your employer never authorized or that fell completely outside your job duties and actual/apparent authority.

The bottom line: any contract you sign is not just representative of your performance but will also be part of your legacy as a manager of that facility.

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