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Cancellation Clause

Discussion in 'Business Fundamentals' started by JThompson, Feb 5, 2004.

  1. JThompson

    JThompson Member
    from NYC
    Messages: 71

    What kind of cancellation clause do you use in your contract, if any? I just lost an account. No cancellation clause in my contract. However, I don't think it would have made a difference because they cancelled due to a lack of money. Said we did a great job but they were tapped. Got to appreciate them not stringing us along. BTW, this was for a condo development's HOA. Thanks.
  2. Robhollar

    Robhollar Senior Member
    Messages: 766

    How does a HOA run out of money for plowing?? Sounds fishy to me, they are oblagated to keep the drives and walks clear. Sounds like you may have been under cut....Rob
  3. Mick

    Mick PlowSite.com Veteran
    from Maine
    Messages: 5,546

    I agree with Rob. No way is a HOA going to run out of money. Neither are they just going to stop plowing or do it themselves. If you have a contract, a cancellation clause wouldn't make any difference in this.
  4. Mdirrigation

    Mdirrigation Senior Member
    Messages: 413

    Next snowstorm see if anyone plowed the lot. What good is a contract if they can cancel unilaterally. Try and do that with a cell phone. If you have a contract you are obligated to fufill you obligations under that contract . Unless you have them sign a release you could be held liable for injuries due to conditions as a result of you not plowing. What about the lost income for the remainder of the season .

    Ok do they have grass ? and a roof? Well they have to have money to pay for those upcoming expenses. Hoas always have a set aside for emergencies. I had a similar situation 10 years ago I made the business buy out of the remainder of the contract for a fee and made them sign a release of liability.
  5. JThompson

    JThompson Member
    from NYC
    Messages: 71

    I'm sure they are going to do something about the snow. They probably did find someone cheaper. Doesn't mean I was going to lower my price to continue. However, I have a few accounts that are low on funds stemming back to last winter. Even after assessments. Some I'm workig with. Some raised the trigger to cut back on the snow. Really doesn't matter what they do now. MDirrigation hit on what I was really looking for. A contractual clause on how to handle this situation. MDirrigation, could you expand on what your clause says? Or anyone else?
  6. Robhollar

    Robhollar Senior Member
    Messages: 766

    That would be something that you would have to write into the contract. Something to the effect that if they are to cancel early then there would be an XXXX.XX fee. I dont know if you could do anything about it now. From the sounds of it your contract didnt do this. It was prob more to protect you in the event of somebody falling and to protect them on a price increase. I feel if you was to write a cancellation clause then some people might tend not to sign on with you. Its a catch 22. Sometimes in the service industry you have to bend till it hurts so that you dont break....Rob
  7. CMerLand

    CMerLand Senior Member
    Messages: 173


    Because my experience with US Maintenance (shudder) last year and their reputation for lowballing, before I sent my contract to them I decided to come up with a clause in my snow contracts to prevent cancellation from occuring. Ive never tried to enforce this clause but I do agree we need to prevent such abuses of contractors from occuring.

    The clause states

    Once accepted, termination of this contract can only be made in writing with a 30 day cancellation notice for failure to provide services as outlined within this contract. In addtion, the contractor must have been notified in writing of any claimed deficiencies in services or performance and given an opportunity to correct any such errors at the time they are discovered.

    NOTE: Locating a cheaper service provider is not grounds for dissoulution of this service agreement. Because these properties will be scheduled as part of a service route and once scheduled, additional work opportunities may have been turned away, C. Merrick Landscapes, LLC must mutually agree to terminate this contract at its discretion, for any reason other then failure to provide services. If allowed to terminate this agreement prior to its end date, (client) agrees to pay C. Merrick Landscapes, LLC a lump sum payment equal to 5 times the service costs for a 2-4 inch snowfall.

    initial here............

    The idea for this clause came from US Maintenances own contract which said that if I the sub-contractor tried to solicit the work on my own for a period of 2 years I would be charge 23 times the value of the contract.

    Why would I share this info? So maybe every other contractor out there starts using it in there contracts so professionalism becomes the norm, and contracts cant be voided leaving us snow pros with a hole in our route because some plow jockey showed up and told them hed do their lot for half our charge.

    We are like a landlord who is entitled to the full rent even tho the person moved out two months before the lease was up. However, unlike a landlord it is unlikely that we can mitigate our losses by finding new clients two months into the plow season. Add this clause and use it fellows, and when it is seen on every proposal a client has to choose from, the client will realize he cant just jump at the next lowest price that walks in the door.
  8. JThompson

    JThompson Member
    from NYC
    Messages: 71

    PERFECT!!!!!!!!!!!! THANK YOU!!!!:D :D :D
  9. Mdirrigation

    Mdirrigation Senior Member
    Messages: 413

    My agreement basically states , Liquidated damages : if the customer unilaterally voids this agreement liquidated damages in the amount of _______ will be due contractor .

    I set that amount on the anticipated revenues of that lot for the season . The personal letter of guarentee is the best part , This makes the person who signs the agreement liable for payment as well as the company or Hoa etc. I also have an assignment clause that allows me to sell the contract to someone else . A binding arbitration clause. ( this lets me be in control of how and where disputes are settled) Time to complete the work etc etc. For residentials that flag me down I have a waiver of liability I have them sign before I plow . Automatic renewal clause is also part of my commercial agreements

    The whole idea of a contract is to cover you and your interests as best as possible. The real interesting thing is that 99 per cent of the people NEVER read the agreement they just sign it. One thing to remember is have them sign and print their name in front of you.

    A signed contract is an ASSETT for your business it , Its something that can be sold . I can actually borrow money against my contracts , I can sell my accounts to someone else .
  10. kipcom

    kipcom Senior Member
    from Indiana
    Messages: 455

    HOA runs out of money ??? Sure, they do it all the time. In todays world people want the "POWER" but dont want to do the work so they hire an HOA management company. This company has a budget to work with and when it is tapped...thats it.... no more. But you can bet your axx there is enough $$ to cover the fees of the HOA mgmt co. :eek:
  11. Lawn Lad

    Lawn Lad Senior Member
    Messages: 407

    Here is our cancellation clause:

    2. Termination. Either party may terminate this Agreement upon (48) hours of prior written notice to the other party. The Owner’s obligation to pay the Contractor for all fees associated with the Services performed up through and including the day of termination or expiration of this Agreement shall survive termination or expiration of this Agreement. A seasonal contract cancelled during the term of the contract may at the discretion of the Contractor be recalculated and invoiced on a per occurrence basis to cover work completed relative to the date of the contract cancellation.

    For me, I don't want a customer who doesn't want me. I can understand having a clause in the contract as CMerLand has in their US Maintenance contract. I might feel different about a contract where I was leasing specific equipment dedicated to a site. Since none of our accounts are large enough to provide any hardship if I loose them, I have used the above clause. However, if an account was going to represent a large share of the business and we were signing obligations on our end to assure equipment/resources were on site, then I'd have a financial consequence for cancelling the contract that a minimum would cover my costs related to the cancellation.
  12. jhook

    jhook Senior Member
    Messages: 375

    I usually get my money up front for any seasonal contracts. Even the big ones. Some places want to be billed over 4 months so I say fine, Nov.1, Dec.1, Feb.1, Mar1. Some places just give me 4 postdated checks. They can cancel if they like :)