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MAY 2014

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Standard Contracts: No Laughing Matter
by Mary A. Redmond

How often do you sign a contract without reading it? You do that for hundreds of reasons.

Six Common Excuses:
If I delay to negotiate contracts, the deal goes away.

Been doing business with them for years. They've always done what they say they'll do.

They said the contract is non-negotiable.

Lawyer cost too much.

Contract is 2 pages long, how bad can it be?

"It looks standard to me."

If you've money to burn, sign a contract without reading it thoroughly and negotiating it aggressively.

If you don't ask for help, be prepared for a bumpy ride. Why? A written agreement remains long after the honeymoon glow wears off. Equipment breaks. Service falters or is inconsistent. The equipment doesn't do what they promised it would do. Supplier and financial companies' plus their contracts are frequently sold to competitors. You have new relationships to build. When times get rocky, neither old nor new relationships may carry much weight.

Contracts are written by attorneys to protect their client, not you. Written agreements are one-sided and the balance on this teeter-totter is never equal. What can you do?

Play Worst Case
Assess the potential damages if the deal blows up in the first year. Be sure to add in the cost of paying the other guys legal fees, assumed damages, fines, late payment fees and penalties. If the case goes to court, there will be an expense to hire your attorney, pay court costs, filing fees, tax penalties and the list goes on. This expense is to defend you from the "unprincipled scoundrel" who used to be your trusted vendor/buddy.

Penalties usually include paying all remaining payments for the full term plus an amount to make up for lost profits the supplier experienced during the legal battle. And you still need to locate and pay for replacement service providers or equipment.

Weigh the Options
1. Read the agreement yourself. Consider how often you read contracts. What is your familiarity with the legal and contractual terms contained in the agreement? Do you know the laws in your state and how they apply to this contract? How familiar are you with the laws in the state in which the case might be litigated? Seldom is the matter handled in your home state. 2. Hire an attorney. You can save the attorney a little review time by highlighting what you are most concerned about after you're read the contract. Ask for a flat rate to review the agreement. 3. Hire a contract expert who is not an attorney. Propose that they work under a gain share agreement. Some agree to a flat rate (lower than that of an attorney) and a percent of the savings they achieve for you through their review and negotiation process. DC

FoleyMary A. Redmond provides highly specialized information for corporations, managers and dealers who negotiate and manage leases. With 28 years in the leasing industry, including 21 working for the largest leasing companies in the U.S., Mary knows leasing. You may reach Mary at 913-422-7775 or mary@reviewyourlease.com

2013 Chapter Member of the Year National Speakers Association - Kansas City

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