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The Risks and Rewards of Recycling
November 13, 2014
Be Careful with Contracts
Poor contract practices leave recyclers and other waste companies vulnerable to risks too. A contract is the best line of defense in assuring that a recycler or any waste company is not held liable for something they did not intend to provide or a quality of service that could not possibly be delivered. Yet too many companies do not spend nearly enough time managing contract risks.
Ideally, companies should develop their own standard contract or terms and conditions and attempt to use them for each project or client. Although many clients insist on using their own contract form and that requires extra precautions of waste firms. Client-generated contracts need to be examined closely because they often contain clauses that can cause as many problems as just relying on a verbal agreement.
Many client-generated contracts contain a broad-form indemnification clause that requires a waste or recycling company to indemnify the client for its own negligence. Another problem area for waste firms is ‘standard of practice’ language, which may include words like "warranty" or "guarantee" or phrases such as "highest standard of practice." As a provider of waste or recycling services, companies are best to avoid offering warranties. Accepting such clauses and phrases increases potential liability, holding the firm to standards that are difficult to achieve. Instead, a waste firm’s work should be judged by the acceptable standard of practice that exists at the time that the services are offered.
Because of the increased risks of signing client-generated contracts, a company should have specific review requirements. And as most managers have had little or no contract review training, contract review training is an important part of a company’s overall risk management program. And when a manager comes across any unfamiliar language, he or she should know when to seek review by legal counsel. Contract Components The dictionary states that a contract is "an agreement between two or more parties for the doing or not doing of some definite thing." Whether a company decides to develop its own contract form or use the standard contract forms available, it’s important to note that to be considered binding, a contract -- whether verbal or written -- must meet the following five criteria:.
- About The Author
- Matt Gartner
- Sr Underwriter, Environmental Property & Casualty, Insurance, AXA XL