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Contracts — Ten Steps to a Better Contract

Contracts — Ten Steps to a Better Contract. American Chamber of Commerce Executives Presented by George E. Constantine, III, Esq. Venable LLP Washington, DC. George E. Constantine, III, Esq. Counsel to tax-exempt trade associations, professional societies, chambers of commerce

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Contracts — Ten Steps to a Better Contract

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  1. Contracts — Ten Steps to a Better Contract American Chamber of Commerce Executives Presented by George E. Constantine, III, Esq. Venable LLP Washington, DC

  2. George E. Constantine, III, Esq. • Counsel to tax-exempt trade associations, professional societies, chambers of commerce • Former Staff Counsel for the American Society of Association Executives • Concentrates practice on tax, contracts, intellectual property licensing, election law, corporate governance and other issues affecting tax-exempt, nonprofit corporations.

  3. Today’s Program • Introduction to contracts • Ten steps to a better contract • Questions • Conclusion

  4. What is a contract? Offer Acceptance Consideration Memorandum of understanding Letter of intent Oral vs. written Introduction to Contracts

  5. Introduction to Contracts (continued) • Who can bind your organization? • Board members • Staff • Electronic signatures • Organizational procedures and limits

  6. Ten Steps to Negotiating a Better Contract

  7. Step 1: Rethink the Process — Starting with the RFP • What is an RFP? • Why does my chamber need an RFP? • Formalizes the process • More professional approach to contracting

  8. Step 1: Rethink the Process — Starting with the RFP (continued) • Key provisions • Take advantage of your leverage • Not just price and timeline • Address indemnification, liability, independent contractor • Get signature from contractor

  9. Step 2: Remember that Everything is Negotiable • The big lie — “it’s a standard provision” • Read everything in the document • Consider using a chamber-created form agreement as the starting point • Be ready to walk away

  10. Step 3: Be Certain the Contract Says What the Contractor Will Do • “Warranty” provision should be very clear • Consider incorporating the original proposal as an attachment (leverage) • Watch for “weasel” words like “estimate,” “on or about,” “reasonably,” etc.

  11. Step 3: Be Certain the Contract Says What the Contractor Will Do (continued) • Include blanket provision promising competence and compliance with laws and regulations • Avoid disclaimers of warranties (address in RFP if possible)

  12. Step 4: Don’t Let the Contractor Control Liability Issues • Artificial limitations of liability • Amount of contract • Direct vs. indirect • Indemnification

  13. Step 5: Make Sure Payment Terms are Clear • Fixed price vs. time-and-materials (watch for “weasel” words here) • Ability to dispute invoices • Reasonable turnaround time • Payment obligations on termination

  14. Step 6: Intellectual Property — Protect What is Yours • Chamber name, logo, mailing list • Chamber trade secrets and confidential information • Who owns what is being created (freelancers)? • What if a contractor provides something that is owned by a third party?

  15. Step 7: Term and Termination Provisions Should be Reasonable • Avoid long-term deals • Seek no-fault exit provisions • Avoid long-term renewals • Think carefully about “automatic” renewals • Provide for termination on breach (watch for long “cure” periods) • Arbitration or mediation?

  16. Step 8: Even Read the “Boilerplate” • Choice of law and jurisdiction • Notice provisions • Assignment rights

  17. Step 9: Always be Willing to Walk Away

  18. Step 10: Remember “Special” Chamber Issues • Involvement of a board member’s company should be handled in a way to minimize conflict of interest concerns • Improperly structured agreements could result in unnecessary tax burden to chamber • Know enough to spot the issues and when to ask questions of your tax and/or legal advisers

  19. Questions????

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