Read More »" /> The Devil is in the Details. Randal Pentiuk; Pentiuk; Couvreur & Kobiljak P.C. | National Cooperative Law Center - Part 3

The Devil is in the Details

Rule #3: Make sure there is liability & automobile insurance. Requiring insurances of the vendor is a simple enough requirement and if you are dealing with a reputable company, it will not be a problem. In fact, it is expected as a customary element of doing business. Should you meet resistance to imposing insurance on the vendor, that is a red flag that you should run away from that deal.

Among the insurance requirements you should seek are insurers that are licensed and registered in your State. The amount required should be abundant and if it involves high risk activity, ask for more. Make sure the insurer has the financial means to pay any claims, and that if it cancels the vendor, that you get advance notification. Also, it is easy enough to check on the insurer’s history of complaints against it. You do not want to have an insurance company that fights with the vendor and the Cooperative when a third party files a lawsuit. You want an insurer to take up the defense immediately and handle it all the way through final disposition.

Associated with this is identifying the scope of coverage. This requires professional advice to make sure that all possible claims are covered in the policy. These need to be spelled out in the bid specifications.

Rule #4: Require a start and finish date. As simple as it sounds, many times the parties do not set a start and finish date. This can be very frustrating when the vendor uses that omission to excuse slow performance.

Using a penalty for untimely performance is a powerful stick to prod a vendor into action. Of course, that needs to be in the contract. Similarly, the Board may consider a reward to give an incentive to early performance. These are reasons why rule #2 is so important.

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