By: Sharon Glenn Pratt
DEFINITION:
A contract is a promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.
OFFER + ACCEPTANCE + CONSIDERATION
WRITTEN OR UNWRITTEN – Discussion, Invoice, “Proposal,” Plans, can all be binding contracts
HOA’s use contracts for variety of things:
- Hiring Personnel
- Maintenance
- Construction
- Services
BOARD has duty to negotiate contract that is in the best interest of HOA and adequately protects HOA.
BOARD has certain limits on contracting authority in by-laws, such as length and dollar amounts, multiple bids.
Don’t just sign off on contractor’s proposal, it wasn’t written with protection of HOA in mind.
NECESSARY TERMS:
SUBJECT MATTER –
should be clearly spelled out
specs, if necessary
TIMING –
spelled out, can also include maintenance and disincentives, penalties,
liquidated damages
PRICE –
specified or specified formula (like time and materials with hourly price for time), “not to exceed,” requirement for written change orders
PROPER PARTIES –
HOA’s official legal name, not managers or President
IMPORTANT EXTRAS:
TERMINATION –
terms for getting out as important as getting in
INSURANCE –
particulars, proof of insurance, A.I. endorsements
INDEMNITY CLAUSES –
hold harmless or indemnify for certain things
ADR OR NOT –
RECITALS AND DEFINITIONS –
background context, intent and purpose
ATTORNEYS FEES –
to prevailing party
| BEFORE FINALIZING CONTRACT: | DURING: | AFTER: |
| owners’ buy in? licensed contractor? permits pulled? compliance with codes? references? due diligence? | follow-up on provisions re insurance purchase payment hold backs | save contract save insurance info |