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101 Ways To Improve Your Cooperative

CHAPTER FIVE: DEALING WITH CONTRACTORS

        Boards frequently enter into contracts and just take the low bidder, accept long term deals, and end up disappointed or worse – in litigation. The information here will minimize these problems.

53. First, understand that the contractor needs you more than you need it. Often contractors will act as though you have to accept their standard contract, as if they were doing you a favor. The reality, especially in this economy, is that the Cooperative holds the upper hand. Your size alone makes you very desirable. Do not be shy about exercising your advantage to get the best price on the best terms.

54. Do not feel compelled to take the low bidder. Do background checks. Find out about their litigation history. Are they sued by their customers? Find out why. Your Attorney can assist in this due diligence.

55. With the assistance of the Cooperative Attorney, review and negotiate a written contract that spells out key provisions, and do not accept their printed contract form as though it cannot be changed. Insist on the following:

Clear scope of services

Insurances to be carried by the contractor

Start and completion dates

Liquidated damages if not done in time

Workers compensation

An early termination clause

A short term of the contract

Consequences if the contractor breaches

Payment of attorney fees if the contractor breaches

Bonds to ensure payment of subcontractors & suppliers

Performance bond

56. For routine contracts, we have developed the “standard wrap around contract” that takes the contractor’s bid documents and incorporates it by reference, and then spells out our standard provisions that protect the Cooperative and specifies that if there is a conflict between the two, our document governs and prevails.

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