banner ad

Contract Clauses and Terms You Should Know About

Contract terms, clauses and specifications are a concern as they are legal documents that bind and outline the terms of agreement and service, between a customer and service provider. From the contractors prospective, it is best to write and provide the service agreement and specifications to prospective customers. The contract, agreement and specifications should be proportionate in length and complexity to the account being bid on.

Any search engine will bring up a wide variety of boiler plate service agreements and specification for cleaning different types and sizes of accounts. When dealing with an account over a few thousand dollars per month, an attorney review the wording before you or the prospective customer sign on the dotted line. Contracts can be written to include any wording that the parties want. There is nothing wrong with asking for and expecting reasonable changes to be made to a document before agreement and signature. That doesn’t mean that either party is going to be agreeable to wording that is not in their best interests.

Clauses to Include

30 days Cancellation:
Most cleaning contracts have a cancellation clause for the customer, sometimes for cause and sometime for no reason at all. You want to make sure you have a way out of the agreement also. This can often be inserted in small to medium sized accounts without much of a problem, with larger or mega accounts, you will probably have a tough time getting the customer to agree to your having a way out of the agreement before the end of its term. The customer will probably demand cancellation wording that allows them to cancel the contract for cause, with cause needing further clarification.

Start and End Date:
Every contract needs to have a start and an end date that specifies the term/length of the agreement. Normally contracts are for at least one year, but could be any length, 3, and 5 year agreements with one or more options to renew are also common. There is usually a date of notice requirement that one or both parties need to comply with, specifying their intent to extend the agreement or exercise an option for an addition period of time. It is not uncommon for companies to renew agreements indefinitely on a year to year basis, however, from a contractor’s viewpoint, generally the longer the renewal period the better. Unless there are insurmountable problems with the account, most customers don’t like to change contractors or go out to bid until the end of an existing agreement.

Paper, Soap and Plastic:
If possible, exclude the cost of paper products, soap and plastic liners from your pricing structure. These item go up and down in cost and there no need to take a risk here if you don’t have to. The safest approach is for you to order the supplies and let the customer pay for them, or you order and pay for them, but add on a 3, 5, 7 or 10% surcharge to each invoice as a handling fee.

Late Payment Penalty:
Make sure any agreement you sign includes the payment terms that you need, along with a late fee penalty of 10% – 20% and hold the customers feet to the fire if they fail to have payment in your hands by the due date.

Other clauses that you should consider including relate to, right to subcontract, initial cleanup costs, and rates for emergency cleanup, hard floor care, carpet cleaning and pressure washing

Clauses You Don’t Want:

Key Loss:
Watch out here. If there is a key clause it the agreement, make sure you have insurance coverage as rekeying a building due to one lost key can run tens of thousands of dollars in a large account.

Defect Deduction:
Contracts are being written that include wording that allows the customer to deduct fees from the contractors monthly fee based on quality control inspection defects. The contract should also specify that all inspections and quality standards apply at the end of the cleaning cycle and before use.

Labor Hours Requirement:
Avoid wording that gives the customer with the right to examine time records or requires that you provide a specific number of labor hours to an account. Other terms to avoid relate to deductions, credits or audit rights.

That’s it for this month. Best of luck and keep it clean out there.