Legal
Gambling with
contracts is a
dangerous game
Landing the job should
never be at the expense
of understanding terms
and contract conditions
mance, are the starting point for a broader
analysis of the obligations imposed and
whether to ask for alternative terms. ;e
worst thing to do is recognize an issue —
energy or otherwise — too late. Careful
analysis of contractual obligations at the
start of negotiations is an essential step.
By Matthew Johnson
For three days in Las Vegas, Sept. 14- 16, GlassBuild America: ;e Glass, Window & Door Expo will provide
glass fabricators and manufacturers, glaziers and retailers, the chance to compare
notes on the glass and glazing market. It
also will give attendees the opportunity
to learn a lesson in casino economics: ;e House always wins. Why does
the House always win? ;e cynics say
it’s because the games are rigged. ;e
optimists say they haven’t hit their lucky
streak yet. Wherever you fall on that
spectrum, the reality is that when it
comes to games of chance, the House is
bigger and has more experience than the
average gamer.
For many companies in the glass industry, contracting is a lot like going up
against the House. Small contractors and
businesses are presented with legal documents by large conglomerates with terms
and conditions that may not be fully
understood. Hungry for work, companies accept the small type and one-sided
conditions of these contracts, gambling
that the terms will not come back to
haunt them later. Everyone understands
these situations — you may be there
yourself — but landing the job should
never be at the expense of understanding the terms and contract conditions.
;ere are as many contracts as there
are types of work. As a result, there is no
one rule book for the interpretation of all
contracts. ;ere are, however, some basic
contracting principals that businesses can
incorporate into their best practices.
Obligations
Contracting between companies should
be fair, but many times it is not. Terms
and conditions in form and standard contracts often impose harsh or unnecessary
conditions on purchasers or contractors
that can trap the unwary. Take, for example, one of the more common contractual
conditions appearing on construction
projects: clean-up charges. Under the
guise of fairness, many general contracts
group these charges together and then
divide them amongst the subcontractors. At first blush, this might seem fair,
but certainly the shower door installer
does not want to pay for cleaning up the
drywaller’s leftover debris and painter’s
hazardous material disposal fee. Equality
of contract terms can only be achieved
when the context of the work is incor-
Insurance and indemnity provisions
Insurance and indemnity take up the largest section of most contracts, and notably
also contain the smallest print. Risk transfer through insurance and indemnity provisions should be key components of any
company’s risk avoidance/management
strategy. Companies must be well versed
in reviewing, interpreting and complying
with insurance/indemnity requirements
when entering into contracts. No longer is
a standard “vendor’s endorsement” or an
Terms and conditions in form and standard contracts
often impose harsh or unnecessary conditions on
purchasers or contractors that can trap the unwary.
porated into the obligations incurred.
When examining a contract, two
essential questions must be answered:
What obligations are being imposed?
And, are those obligations under my
company’s control? Glass companies
should be willing to contract and accept obligations they can control such
as workmanship, labor allocation and
direct supply. ;ese items are within a
company’s expertise, making the obligations easier to evaluate and meet.
When the obligations are not in a
company’s control, serious thought is in
order. For example, consider requirements
that glazing companies ensure buildings
meet specified energy performance levels.
While glass plays an increasingly impor-
tant role in overall building performance,
the dynamic energy use of a living build-
ing is well beyond the control of a glazier
alone. Does that mean that a company
cannot accept such obligations? No. Con-
siderations of energy performance, includ-
ing a company’s impact on that perfor-
“additional insured” certificate su;cient
for most advanced companies. Specific
exclusions, inclusions, waivers and broker-
age requirements are becoming common-
place for all types of contracts. Adding
to that complexity are specific require-
ments from individual states regarding
indemnity and insurance regulation.
