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posed by the proposed contract and take
the steps necessary to protect itself against
losing (through insurance or indemnity).
;ere is no magic phrasing or special
language that will protect a company
from the complexities of insurance and
indemnity contracts. Rather, companies
must get help, get informed and get
educated. Lawyers and risk managers can
provide valuable resources in the interpre-
tation of these issues. Where the job value
does not permit such recovery, consider
resources from the National Glass As-
sociation, McLean, Va., and other trade
organizations. Even your local Better
Business Bureau might help clarify some
of these issues. Understanding the nature
of the risk being accepted and transferred
is essential to surviving a potential loss.
Scope, breadth and longevity
;e scope, breadth and longevity of
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an obligation must also be evaluated
before the value of a contract can truly
be assessed. For example, some contracts
require product and services warranties in
addition to bonding. ;ese are important
matters to consider when evaluating the
potential long-term impacts of a bid. To
start, note that product warranties may
allow manufacturers to explain what a
product can and cannot do, and what
they will or will not do in response to
a claim. ;ey are useful tools that can
convey a product’s utility and limitations.
;ey are equally useful for those specifying and purchasing the materials to know
what relief is available if they have a claim.
Trades and suppliers also now see
warranty requirements of their own
in contracts. Similar to manufacturers that support their product through
a warranty, these companies are asked
to stand behind their work. Compelled
labor warranties — through bonding or
direct performance — are being inserted
into more and more site-specific project
requirements. Evaluating what a specific contract requires in this regard is
key. Does the contract require a bond?
Does the labor warranty compel quality control or checklist implementation?
Can your company’s personnel meet
the demands of field service one year,
five years, 10 years down the line? Will
any value of the original contract be left
after all warranty services are accounted
for? Project-specific questions like these
are important to ensure companies
maximize value for their contracts.
Contracting is not gambling. At least,
it shouldn’t be. In any contract, it is important to understand the obligations, the
requirements they place on your company
and whether you are willing to accept the
associated long-term risk. Everyone wants
to secure the job, but blind acceptance of
contract terms without an appreciation of
what must be done to meet those terms
may prove to be a dangerous gamble.
The author is a member of The Gary Law Group, a
Portland-based firm specializing in legal and risk
issues facing manufacturers of glazing products.
Write him at matt@prgarylaw.com.
