Few things can raise one's blood pressure like signing a big contract. That can be especially true for board members or managers signing sometimes mammoth contracts on behalf of a co-op or condo association, obligating their neighbors, friends and themselves to page after page of fine print. Thankfully, there are more than a few ways to stop the pen from shaking when the dotted line get signed, and it all starts with ensuring a very thorough vetting of the contract in question.
Contracts are often thought to be intimidating, and that's probably a good thing in many ways. Contracts shouldn't be taken lightly, as they represent a legal agreement of responsibilities. Whatever may be said between an association and an association, if it's not in the contract, there's no proof it was part of the agreement.
Generally speaking, contracts are written on behalf of the party who's writing them. “So they're one sided—or lopsided,” says Sima L. Kirsch, a Chicago-based attorney at the Law Office of Sima L. Kirsh PC. “Most people don't realize that at first, contracts are not contracts; they're proposals. They're not complete contracts. A proposal is an offer, consideration and meeting of the minds. That meeting of the minds is what sets all the other terms in motion,” says Kirsch.
An important tool for boards is to simply compare and contrast different offers. If the initial contract you're given is more realistically a proposal, it helps to have different versions from different vendors to sort out who's really a serious contender for your business. “I think you always have to revert back to the Business Judgment Rule, which in Illinois is the divining rod for whether or not a board is acting consistent with its fiduciary duty. And while nobody sets out a plan, you oftentimes hear you should review at least three different vendors,” says David Hartwell, founding partner at Penland & Hartwell LLC in Chicago.
These days, contracts that automatically renew are everywhere, from your Chicago Tribunesubscription to your NPR contribution. Some of these are convenient, and make life easier by eliminating the need to stay on top of regularly recurring charges. But your Pandora membership is one thing; your condo's laundry contract is another. “Each side should have the option of determining at certain points of times whether or not they want that relationship to continue or not,” says Hartwell.