Hardwood Floors April/May 2024

By Iqra Mushtaq

SCOPE OF WORK The scope of the work or the nature of the relationship should be stated clearly in the contract. This means a thorough description of the goods or services that the

2

vendor is going to supply to your company. Keep in mind that this is the description on which it will be based as to whether the vendor is or is not doing the work on which the compensation is based, so being specific is important.

TOTAL PRICE The contract should specify the

3

specific dollar figure that will be due and when. This could include the total cost for the services rendered, the price for

ADOBESTOCK ©

the goods purchased, or any other monetary information relevant to the specific interaction. Make sure you are aware of when payments are due and of any late fees and penalties that may apply. Ideally, the payment schedule should correlate to the deadlines and delivery dates. TERMINATION Ensure that there are contract provisions that address when your company and when the vendor can end the contract. The contract should give the details of what qualifies as a reason for contract termination. These reasons usually are broken down into “for cause” clauses and “for convenience” clauses. Both types of provisions are important for your business. Termination for cause clauses allow parties to terminate a contract due to the other party’s inaction or actions or a breach of contract. In most cases, one party must submit written notice to the other party to terminate the contract. There may be other steps involved in the case of a breach of contract, such as a cure period for the breaching party to cure the issue that has arisen. So, if a delivery was to be made by a certain date and it has not yet been made, the notice would remind the other party of the due date and give them an opportunity to “cure” the issue by delivering the product, and if they fail to do so thereafter, the contract may be terminated. Termination for convenience clauses allow your company to terminate a contract for any reason even when a breach has not occurred. A termination for convenience clause is included 4

in contracts since it allows for parties to end their responsibilities in a way that typically does not lead to litigation or harm to either party. This provision should state what notice is required and whether the vendor can charge any payments for completed work, as well as if your company will be given a refund of payments for work not yet completed by the vendor.

AUTO-RENEWALS In some contracts, there is a provision that the term will renew automatically unless certain conditions occur or if the contract is not canceled. If the termination provision allows either party to terminate

5

the contract for convenience, then the auto-renewal provision has very little impact as even if the term renews, there is a right to terminate for convenience. However, if the contract does not allow termination for convenience and instead only allows termination for cause upon a breach of the other party, then the renewal of the term will have a significant impact. Therefore, if the auto-renewal does not provide any substantive benefit, it may be worth it to remove the auto-renewal provision from the contract and to do business on an order-by-order basis.

the magazine of the national wood flooring association

33