Contract Negotiation and Administration By Jasmine F. Hale, Esq.
Boards often mistakenly think that the dollar value of the agreement represents the association’s risk. The risk of the agreement is the amount of damage the contractor’s work can cause that the association may have to pay for.
14 The Law Journal Winter 2023 | cacm.org
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warding contracts is part of a board’s daily diet in terms of its duties. They can range from the standard approval of yet another plumbing repair bid for $700 in an owner’s unit to complex multi-phase post-construction defect agreements spanning years, millions of dollars, and everything in between. This article covers best practices, important provisions, and tips for managers to navigate the sometimes unexpectedly choppy waters associated with contracts.
Contracting Best Practices I conduct a fair amount of board training orientations (upwards of 50 a year.) In these meetings, when the discussion turns to contract best practices, I explain that boards should always have the agreement – regardless of monetary size – reviewed by legal counsel. Following gasps, I then explain that I’m not saying it to drum up business! A tenet of contract law is that the parties are bound by the four corners of what is (and is not) stated in the agreement. Of course, both parties at the start of a contractual relationship assume it will all turn out well, and most of the time, it does… until it doesn’t. I have seen more negative issues from the simple $700 plumbing bid that causes $150,000 of flooding damage to several units than I have from a million-dollar asphalt contract. Boards often mistakenly think that the dollar value of the agreement represents the association’s risk. The risk of the agreement is the amount of damage the contractor’s work can cause that the association may have to pay for.
