Every year consumers lose money due to not understanding their contract when they enter into them. The advice of an attorney could have prevented the loss. It is common for vendors and contractors to hide terms and clauses within the fine print of contracts, but lately we have noticed this being taken to an extreme. This is a story based on a recent experience with a client that illustrates why it is important to have an attorney review your business’ contracts.
An owner of Restaurant, LLC entered into a contract on the company’s behalf with a provider of Point of Sale Systems and processing services. The contract seemed relatively short at only three pages long. Most of which was information to be filled in by the part owner of Restaurant, LLC. The last quarter of the last page of this contract, which was in 6 point font, drastically changed the terms of the contract. In fact, the “simple contract”, the company entered incorporated two different webpages with tiny print into the contract.
The first webpage incorporated 15 additional pages of 8 point font. This includes an arbitration provision restricting arbitration to telephonic hearings only, a unilateral attorney fee provision (contrary to Florida Statute), and numerous provisions that explicitly provide that the vendor is under no obligation to do almost anything. It also included very specific termination procedures that if not followed could lead to further expense and an early termination fee.
The second webpage incorporated 23 pages of 8 point font that also included an arbitration provision restricting arbitration to telephonic hearings only. It also included its own early termination fee that would amount to more than Restaurant, LLC paid on average per month multiplied by the remaining months of the contract.
When these 38 pages of additional terms are read in conjunction it creates a contract that the vendor is not capable of breaching. According to these additional terms, if “a third party is in any part or wholly responsible for the material breach then no breach occurred.” This vendor’s policy was that it would not communicate directly to their clients instead you had to communicate to a third-party company with any concerns. This third party had completely shut down communication with Restaurant, LLC. The vendor held money they were not supposed to hold, and the third party admitted to breaching the contract, but since it was not the vendor exclusively who breached according to the contract no breach occurred.
At the end of the day, Restaurant, LLC cut their losses and ended their contract with the vendor. This came at great expense to Restaurant, LLC, and if they did not pay this expense they would have likely lost at arbitration and would have to pay the opposing sides attorney fees. Contracts such as this offend our notions of fairness and justice, but not only are they legal they are becoming more and more common. Don’t let an unfair vendor contract bind your company to one-sided terms have an attorney review it before signing.
Here at The Weil Law Group, PA our small business subscription comes with a half hour of free contract review or legal advice a month. We also do individual contract reviews for an affordable price. If you have any questions or need any help call 954-603-7603.