Questions on Indemnification clause language in Trash/Recycling contracts

Started by TimB4 • 13 replies • 1900 views

💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

⚡ Takes 30 seconds

Already a member? Log in

TimB4 (Tennessee)
Posts: 21,062

Posted:

All,

We are in the process of awarding a contract for trash/recycling services. One thing that has been noticed as a difference between contracts and, honestly, our existing contract is the wording of the indemnification clause.

Our current contract clause (and 90% of the proposals received) have this language:

The Provider will exercise reasonable care to avoid damage of streets and/or curbing of the property. The Provider will not be held responsible or accountable for liquid spills [pain, yard waste condensation ("grass juice"), etc.] or for cracks or sinkage in weak or old pavement from standard industrial refuse removal vehicle.

Proposed contract language:

Customer shall indemnify, defend, and hold Service Provider harmless from
and against any and all liability of any nature or type, including bodily injury (including death) or
property damage, caused by Service Provider’s performance of services pursuant to this Agreement,
other than damages resulting from gross negligence or willful misconduct of Service Provider’s
employees. Neither Party shall be liable to the other for special, consequential, incidental, or punitive
damages arising out of the performance of this Agreement.

My questions are:

1) Does your associations trash/recycling contract have language similar to (A) what is in our current contract or (B) what is in the proposed contract (basically, I'm trying to see how common the language is)?

2) What concerns do you have with the language in the proposed contract (I also have concerns but want to see if there are any I may have missed)?

3) Would such language as is included in the proposed contract be enough to have you vote against it? (We are currently negotiating with the one company we are strongly considering about this language and likely won't have a response from them until next week)

Thanks,

Tim

GlenL (Ohio)
Posts: 5,491

Posted:

I would certainly run the clause by an attorney for their opinion before signing B but to my lay interpretation the HOA is basically signing away it's rights to damages caused by the trash-hauler for any damages unless you can prove they did it on purpose. For instance our dumpster bins are beside the garages, a couple of years ago a new driver somehow managed to pull down a section of gutter from the garage. He called his company, who sent a supervisor to take pictures and they paid to replace the damaged section. Under the clause you posted, the HOA would have to eat the repairs because it was an accident.

Studies show that 5 out of 4 people have problems with fractions

LarryB13 (Arizona)
Posts: 4,099

Posted:

What did your lawyer have to say about this indemnification clause?

I would be concerned that this seems to be overly broad, If the garbage truck runs over Mrs. Schmidlapp your association is on the hook. If the truck runs into a school bus miles away while on its way to or from your location, you are liable.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Talk to your insurance company on this one. See if it's a rendundancy issue. Let's say they say they are NOT responsible for such and such... However, your insurance company does hold those who do such and such responsible... It may not get them out of what they want.

Basically, sounds like if they leak all over your old used pavement, they don't have to clean it up. If they run over a child or a pet, they don't want to be responsible. Not sure how legal those statements are to have in a contract in the first place. That's something I would talk over with an attorney as these may fall into a fine line of liability.

Insurance company would be the first I would talk about as they will be a vendor. Our vendors are all required to licensed and insured. Plus carry a policy of a million dollars to do business with us. So get a copy of their insurance above the contract. Good luck!

Former HOA President

FredS7 (Arizona)
Posts: 927

Posted:

What LarryB13 said.

This is an overly broad clause in my opinion (I am not a lawyer, but I have been involved with other contract negotiations that got stuck at an attempt to include an overly broad indemnification clause).

Did you have anything in the request for proposals that relates to contractor insuramce? I would look for a way to rule this proposal nonresponsive.

EllieD (Vermont)
Posts: 446

Posted:

Tim,

As I write this, I do not have a copy of our Trash and Recycling Contract that I can refer to.

But while not quite what you asked, thought you might be interested in a News Article re Trash/Recycle Contracts that can be found at:

http://vtdigger.org/2011/08/13/casella-to-pay-1m-penalty-for-anti-competitive-contracts-with-consumers/

And for reference “a” Vermont “Trash Contract” is reproduced on page 14 of:

http://www.atg.state.vt.us/assets/files/Casella%20Revised%20Final%20Judgment.pdf

Also, along the lines of FredS’s post - We do require that that our Trash Hauler provide us with their “Certificate of Liability Insurance” naming our Association as a “Certificate Holder”.

TimB4 (Tennessee)
Posts: 21,062

Posted:

Thanks to everyone for the responses.

To answer Fred's question, we did include the requirement in our RFP that the "Contractor will provide the Customer with a current Certificate of Insurance confirming a minimum of $1,000,000 of General Liability; $1,000,000 Automobile Liability; Umbrella Liability of $5,000,000 and $500,000 Workers Compensation and Employer’s Liability and naming the Association as an additional named insured."

To respond to Melissa's comment - we are having an insurance professional look over the language and tell us exactly what that language means to them.

In response to Glen and Larry - we have not run this by our attorney. There is another company that has similar prices that doesn't have this clause. It is my belief that the Board will go with that company if the company who has these terms doesn't amend them. Therefore, instead of paying for a legal opinion, we would simply award the contract to a company that has the same language as our existing contract.

Ellie - thank you for that information. It appears that the contract in the link you provided has a similar broad indemnification clause. I wonder if this will be the way things are done in the future.

I encourage everyone to continue offering comments.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Here is a point to look into. Do they need to follow any government requirements? I found out that not all cable companies are created equal. The comcast provider was NOT subject to govenment regulations but our current provkder was. That is why I had us keep the regular one.

What did this mean? Well it turns out ALOT. Seems that if Comcast was to replace the cabling we had no recourse to force them to bury it. It is not a requirement to them. Granite the other company did leave the cables on the street for some time, but it was due to a subcontractor issue. However, they did have to bury and we had other legal recourses.

With you it maybe an EPA issue. Some government authority may regulate. I would look into that aspect as well. I learned alot of how important that is with common property.

Former HOA President

TimB4 (Tennessee)
Posts: 21,062

Posted:

Melissa,

Our county maintains a list on their website on who is permitted to perform residential trash/recycling services. Therefore, there are only around 15 contractors available to us.

Interesting thought, but I don't think that the EPA or other governmental authority would require such level of indemnification, especially since the other contract proposals we received did not have the same language.

FredS7 (Arizona)
Posts: 927

Posted:

> we did include the requirement in our RFP that the "Contractor will provide the Customer with a current Certificate of Insurance confirming a minimum of $1,000,000 of General Liability...

The indemnification clause appears to be an attempt to have the company (and therefore its insurance company, if any) not be liable for some types of damage.

Personally I get very disturbed when someone wants me to sign away rights as a condition of anything. If it were up to me I would argue against retaining this company even if they were cheaper than the others.

TimB4 (Tennessee)
Posts: 21,062

Posted:

Quote:

Posted By FredS7 on 05/04/2014 2:36 PM
> Personally I get very disturbed when someone wants me to sign away rights as a condition of anything. If it were up to me I would argue against retaining this company even if they were cheaper than the others.

That is the way we are looking at it. The company is actually our current provider who matched a competitors price. Therefore, we can still go with the other company. There are benefits associated with staying with this company (no learning curve for the residents due to different trash/recycle days, requirement to make sure all the provided recycle containers are returned, etc.). However, those benefits aren't enough to award the contract with that clause in it.

Prior to awarding the contract, we took a much closer look at it (4 people vs. 2 looking at it) and that is when the language on the indemnification popped out. We noticed this yesterday and sent an e-mail to the company about it. We likely won't hear back from the company until Monday or Tuesday.

LarryB13 (Arizona)
Posts: 4,099

Posted:

Quote:

Posted By TimB4 on 05/04/2014 11:51 AM

I wonder if this will be the way things are done in the future.

This is nothing new. Some 40 years ago an acquaintance was negotiating a contract for security services and the vendor tried to insert a similar clause that would have made the customer liable if, among other things, the security guard wrecked his car responding to a call at the customer's location.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Tim

My questions are:

1) Does your associations trash/recycling contract have language similar to (A) what is in our current contract or (B) what is in the proposed contract (basically, I'm trying to see how common the language is)?

Our trash/recycling is individual homeowner contracts with the company versus an association contract. We do have only one company to choose from and I am not sure why but this makes me think so this I will look into why only one.

2) What concerns do you have with the language in the proposed contract (I also have concerns but want to see if there are any I may have missed)?

I am not nor do I play a lawyer. While I think most any lawyer could beat such an inclusive contract, I will not try to legally pick it apart.

3) Would such language as is included in the proposed contract be enough to have you vote against it? (We are currently negotiating with the one company we are strongly considering about this language and likely won't have a response from them until next week.

I would vote NO based on my #2 above response meaning I would not want to be in a defensive position like when asked what do you think it meant when you agreed to it?

Keep in mind my personal belief is that most lawyers are scumbags. The only difference between them is some of them are my scumbags.....LOL

TimB4 (Tennessee)
Posts: 21,062

Posted:

UPDATE:

I wanted to update everyone so others, who may not be aware, will know that just about every item in a contract is negotiable. After many e-mails, the company agreed to simply pull the entire clause.

I had sent e-mails asking that they look at this language or that language. I had sent e-mails that explained why we were concerned. None of that worked. My last e-mail included language from our current President (which I will share below):

Our Association is anxious to enter into the new contract with your company, but I believe there remains a misunderstanding about our concern.

We have a serious issue with the inclusion of the Indemnity Clause (Para. 9) which would require us to indemnify and otherwise hold your company harmless for any damages caused by your negligence. That is unacceptable and we suggest that paragraph 9 simply be deleted. We have not seen that language in any other company's proposal. Our suggested language was only offered as an example of the type of damage related clauses we are familiar with and, on closer review, is already substantially incorporated in the Addendum. (See Pick-up Policy and Yard/Organic Waste Policy). Consequently, please let me know if you will simply delete para. 9 so that we may progress with this new contract.

I believe the big difference was that in the language above we indicated that we desired to actually enter into a contract with them (where my earlier e-mails did not specifically say that).

Again, the update is to show that all contracts can be negotiated. Those who initially write them will obviously write them so it favors them. It is up the Board, as a whole, to identify the terms of the contract you disagree with and negotiate. Mind you the other side may say no. If they do, you will then need to decide if the issue is important enough to go to another contractor (that may be a higher price) or live with the terms of the contract as they are.

Tim

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

✓ Ask follow-up questions
✓ Share your experience
✓ Get expert advice
✓ Access 350,000 discussions

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here