A service company can protect itself from claims by requiring the customer to follow very specific steps if it has a complaint with respect to the services. It is also important to clearly delineate in the contract the obligations of the customer upon breach or early termination. Consider whether there are any circum-stances under which your service company will need to terminate or modify the rela-tionship. For example, if it is possible that the costs of providing services will substantial-ly increase, the service provider may want to include a provision for adjusting the con-tract price or terminating the contract. indemnification provision is only as good as the financial health of the company giving it: An out-of-business customer likely will not be able to make good on an indemnifi-cation obligation. Liquidated Damages The law allows parties to agree upon com-pensation that will be owed if a party fails to perform under a contract or terminates a contact before its expiration. When stipulated in a contract, these damages are called “liquidated damages.” Including liquidated damages in a service contract can be very effective in encouraging customers to settle disputes — or to avoid a breach in the first place — in order to avoid paying the liquidated damages. These are just a few key issues to consid-er when preparing fundamental service contracts to help protect you and your business. Your attorney can provide additional insights into these issues and others that may impact your specific industry or business. Most service companies assign tremen-dous value to their customer contracts, and by investing a little time and money in the company’s form of service contract, the company can better ensure that the value assigned to that contract is protected and that the company’s financial benefit is max-imized. CM Indemnification A service company may desire to include a provision, called an indemnification, which specifies that, if it is required to go to court to enforce the contract and it wins, the cus-tomer must pay the service company’s legal fees and expenses. Please keep in mind, however, that an Attorney Robert D. Cantwell of the law firm Gallop, Johnson & Neuman LC focuses his legal practice in areas of business contracting, financing, mergers and acquisitions, franchising, gaming and federal, state and local licensing. He has represented clients ranging from “ start-up” entities to large, publicly traded and private companies. Mr. Cantwell can be reached at (314) 615-6000. Gallop, Johnson & Neuman LC, a full-service law firm of 80 attorneys, serves public corporations, privately held companies, entrepreneurs and start-up enterpris-es, individuals and families, trustees and trust beneficiaries, charities and non-profit entities. For more information, please see www.gjn.com. Circle Product Information no. 251 on page 32 www.cmmonline.com 39
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