Avoiding One-Sided Contracts
Since a contract is an agreement between two parties, you can often negotiate changes to make an agreement better represent your ministry's interests. Watch out for clauses that shift all liability onto you.
Churches enter into contracts all the time. Whether it's an agreement for copy machine maintenance or winter snow removal, the transaction typically goes as follows: The vendor provides a standard form, and you sign it.
Contracts Are Negotiable
Some people assume that professionally printed contracts can't be changed. In some cases this may be true, but not always. Vendor forms are written for one primary purpose—to benefit the vendor. Since a contract is an agreement between two parties, however, you can often amend the contract to make it better represent your interests.
It pays to carefully study any vendor agreement before you sign it. Having your church’s attorney review and possibly renegotiate important contracts may help you to get the deal you actually want.
Watch for These Terms
When you review a written contract, pay attention to the following terms:
Mutual waiver of subrogation. This means that the church and the service provider agree that their insurance companies cannot recover damages from each other if an accident or injury occurs. That seems like a friendly thing to do, but how likely is it that church officials or members would be in a position to damage a service provider’s property? Although the provision is a “mutual” one, it primarily benefits the vendor.
Indemnification clause. Contract language may ask you to indemnify, defend, and hold a vendor harmless for injuries or damages that might occur during the course of the vendor’s work, even if it was caused by the vendor’s negligence.
To indemnify means you’ll pay what the vendor owes. Defending him means you’ll pay his legal costs. Holding him harmless means that you cannot sue him.
Consider renegotiating this term. You could either make it a reciprocal arrangement or limit indemnity to liability caused by the church.
Damage limitations. A vendor may claim that its liability for loss, damage, or “any other cause whatsoever” is limited to the selling price or some other low figure. Basically, it says that the most you’ll get is a refund, regardless of what the vendor does—or doesn’t do. Ask an attorney to review contracts that seek to limit the amount of damages you can recover and negotiate a more equitable settlement.
When Should I Call an Attorney?
Clearly, you can’t involve a church attorney every time you order Sunday school supplies. So, how do you know when you need legal assistance?
You have to look at the size of the contract and the importance of whatever it is you’re buying.
Consider the benefit the church will receive from the contract if everything goes as planned. Then consider the cost to the church if the vendor does not make good on the promises made in the contract. If the cost is significantly higher than the benefit, then you will want to have an attorney review the contract prior to signing it.
Any decision that will have future legal consequences should involve this type of analysis.
Contracts Aren’t Carved in Stone
Remember, a contract is simply an agreement between two or more parties. Terms can usually be modified if all of the parties consent. In most vendor relationships, everything will go smoothly and no problems will arise. When disagreements do occur, however, you’ll be better off if you have negotiated a win-win contract that protects the church as well as the vendor.