LEGAL MATTERS
Managing Risk with Contracts Life is inherently risky. There is only one big risk you should avoid at all costs, and that is the risk of doing nothing. —Denis Waitley, American motivational speaker and author
E Jeffrey W. King
Outside General Counsel for the for the WFCA Jeffrey King has
more than 35 years’
experience in complex
litigation with a focus on contracts, employment, construction, antitrust, intellectual property and health care. He
serves as legal counsel for WFCA and other
trade associations, and is a LEED Accredited
Professional. For more
information, contact him at (561) 278-0035 or jeffw@jkingesq.com.
very flooring retailer, contractor, and installer faces risks in doing business. Some may involve damage to a facility, equipment, or inventory. Others may be safety hazards that lead to worker accidents and injuries. There are also the risks of supply chain delays, or material price increases. There is simply no way to eliminate risk from uncertain and unexpected events that could affect success — but it can be managed to minimize the risk. When a business thinks of risk management, it often focuses on insurance and safety programs. Without doubt, insurance and safety programs are major elements of any risk management plan. There are risks, however, that are neither covered by insurance nor involve safety hazards. These could be unanticipated increases in material costs; a claim for consequential damages because of a delay in getting materials; nonpayment by a customer or general contractor; and a myriad of similar problems. These risks can often be managed by well written contracts.
Contracts
One of the most important risk management tools are the contracts that flooring retailers and contractors enter into with supplier, subcontractors, and customers. These contracts can allocate certain risks so that the party best able to control and manage the risk bear the responsibility. For example, a flooring retailer will want to allocate the risk that someone is hurt while installing the floors to the installation contractor, who is in the best position to provide a safe work site. The flooring retailer or contractor will want to allocate the risk of design errors to the owner, who may have a contract with a designer or insists on installing certain types of flooring. These are the kinds of risks that a contract should address, so that the parties know in advance who is responsible for what risk.
There is simply no way to eliminate risk from uncertain and unexpected events that could affect success — but it can be managed to minimize the risk. 44 Premier Flooring Retailer | TISE Edition 2022
