The Importance of Involving Legal Counsel in the Review and Negotiation of Contracts With Vendors

An important function of a community association is to oversee essential services that vendors provide for the community such as landscaping, pest control, asphalt paving, and security.  These services require written contracts which should include important terms that protect the association, particularly in the event that the vendor does not perform its side of the bargain or causes damage to a person or property.  As further discussed, it is easier to prevent large costs and legal exposure to an association by sound contract language crafted or approved by an attorney at the start of a relationship with a vendor than to repair the damage that a poorly worded agreement that was simply signed on an association’s behalf without legal review has created.

Legal counsel’s assistance with vendor, and other service, contracts can be important.  Contract disputes can be very expensive and time-consuming.  And, such disputes aren’t always incorporated into the association’s annual budget which could put a lot of financial strain on the association and lead to unpopular special assessments.  Also, the association can be stuck with a vendor that is doing a poor job.   Some examples of where an attorney’s advice is important include making sure the vendor is contractually obligated to provide sufficient insurance and that there are well worded indemnification provisions.  There are some nuances in Florida law regarding indemnity and all too often it seems that contracts created by vendors are one-sided and don’t protect the association in the event for example that a third party is injured as a result of the vendor’s services.  Also, contracts created by the vendor may be unclear or unfavorable to the association regarding the vendor’s responsibilities, the timeframe by which the work must be commenced and completed, payment terms, recourse for the vendor’s failure to perform, warranties, under what conditions the agreement can be terminated, and where litigation must be commenced if there is a dispute, to name just some possible provisions where an attorneys’ involvement in contract review can be very important.  I recall an instance where a national vendor puts in its standard contract that any lawsuit involving the contract had to take place in Pennsylvania—it seems that being required to bring a lawsuit up in Pennsylvania is probably not advantageous to most Florida associations.  If an attorney was not involved in the review of that contract, the association likely would have been subject to that onerous requirement.

A wise man once said that “successful people have systems.”  By incorporating into its system of contracting with vendors the involvement of experienced legal counsel to assist with contract review, the association’s board and property management can better protect the association particularly by avoiding potential disputes with vendors or limiting the association’s exposure in the event disputes occur.

Victor Berwin counsels and represents clients in a broad range of matters with an emphasis on community association/ country club issues, employment agreements and commercial, real estate, and creditors' rights litigation. Practicing law for more than two decades, he has achieved favorable resolutions of hundreds of matters, and has served as lead counsel in more than sixty trials. Prior to joining Sachs Sax Caplan, PL, Mr. Berwin held a leadership role as a partner in a national law firm practice group. He previously was a litigation partner in the Palm Beach County office of a prominent firm. Learn more about Victor by clicking here.