contract language
Grip
hospital system in New York City.
I received a contract to be executed with the following clause:
Contractors: Please note termination clause
If through any cause the Contractor shall fail to fulfill in timely
and proper manner its obligations under this agreement, of if the
Contractor shall violate any of the covenant or stipulations of this
agreement, or if the Corporation shall deem it to be in the best
interests of the Corporation to terminate this agreement in whole or
in part, the Corporation shall thereupon have the right to terminate
this agreement in whole or in part by giving written notice to the
Contractor of such termination specifying an effective date thereof.
So what's the point of a contract if they can cancel at any time? Do
I have the same rights? It's not spelled out in the contract.
Mike Jacobs
> I am a business owner that recently won a bid to provide services to a
> hospital system in New York City.
>
> I received a contract to be executed with the following clause:
<unilateral termination clause snipped>
> So what's the point of a contract if they can cancel at any time? �Do
> I have the same rights? It's not spelled out in the contract.
Termination clauses do not have to be mutual in order for a contract
to be valid and binding. The "mutuality" requirement of a contract
means there must be _some_ obligation on both sides, otherwise the
contract is illusory and a nullity.
It is in fact very common for entities such as this hospital to
include unilateral termination clauses in services contracts like
this. They need to be able to rely on your company's services for a
fixed period of time, and they need to know they will not have you
leave in the middle of the fiscal year or academic year (or whatever)
and leave them in the lurch. You get paid for the actual work you
do, which is where _their_ obligation comes in. But, they _also_
need to be flexible in determining what their needs _are_, so (even if
you are doing your job well) they need to be able to terminate the
contract if they no longer need you.
This clause says they have the right to terminate your services,
either for cause (if you screw up), or even if they simply determine
that it is not in their best interests to continue the contract, but
they have to give you written notice of termination and specifying an
effective date so you can wrap things up and hopefully _you_ won't be
left in the lurch - but presumably, this hospital is not your _only_
client and so it's not quite the same as firing an employee, your
company will still have other work and you can re-direct your staff to
work for those other clients. Now, they could make that termination
date "immediately," but even if so, how is that any worse than if you
(and your staff) were direct at-will employees of the hospital?
I know this seems cruel, but in reality, how is this unfair? ISTM
that it is no worse situation than you would have if you and your
staff were straight employees on an at-will basis rather than a
contractor with a services contract. When an ordinary employee comes
in to work each day, he has no idea whether it might be his last day
on the job - the employer could tell him to clean out his desk, and
have security escort him to the door, at any time. You at least get
written notice of such a termination.
If you don't want to work under those terms, don't accept the
contract. Let someone else do it. And good luck finding an entity
that wants to hire your company on different terms that would let
_you_ walk off the job in the middle of the agreed term, without owing
them damages. That's why they want a _contract_ binding _you_ to stay
with them, and don't just hire day laborers to do the job.
--
This posting is for discussion purposes, not professional advice.
Anything you post on this Newsgroup is public information.
I am not your lawyer, and you are not my client in any specific legal
matter.
For confidential professional advice, consult your own lawyer in a
private communication.
Mike Jacobs
LAW OFFICE OF W. MICHAEL JACOBS
10440 Little Patuxent Pkwy #300
Columbia, MD 21044
(tel) 410-740-5685 (fax) 410-740-4300
Barry Gold
[OP received a contract with the following clause]
>Contractors: Please note termination clause
>If through any cause the Contractor shall fail to fulfill in timely
>and proper manner its obligations under this agreement, of if the
>Contractor shall violate any of the covenant or stipulations of this
>agreement, or if the Corporation shall deem it to be in the best
>interests of the Corporation to terminate this agreement in whole or
>in part, the Corporation shall thereupon have the right to terminate
>this agreement in whole or in part by giving written notice to the
>Contractor of such termination specifying an effective date thereof.
>
>
>So what's the point of a contract if they can cancel at any time? Do
>I have the same rights? It's not spelled out in the contract.
It depends on what other language is in the contract. If that is the
_only_ language about termination, then I would say there is no
contract because the hospital isn't giving up any rights (the classic
definition of "consideration"). It seems to say that they can just
tell you, "sorry, we've decided we don't need your services, goodbye"
and not even pay you for work you've already done.
But it's more likely that this is a contract for _ongoing_ services of
some sort. E.g., you will send in janitors once a day to clean the
place up, or you will provide specified foodstuffs to their kitchen on
a specified schedule or some such.
In that case, they are obligated to pay you for whatever you've
already done, or delivered, or whatever. If you have to manufacture
something, they would probably have to pay you for the costs you
incurred up to the point where they notify you to stop.
But, yes, it would be very much like an "at will" employment contract.
They can fire you at any time, and only pay you for what you've done
so far. That's still a contract: they have agreed to a specified rate
of pay for your services (or a specified price for the goods you are
going to provide), and as long as you are still providing those goods/
services, they have to pay you the contract rate for them.
I'll note that most government contracts are written that way.
Lockheed Martin has a contract with the DoD to design and build a new
plane, the Joint Strike Fighter.
http://en.wikipedia.org/wiki/Joint_Strike_Fighter_Program
Lockheed has in turn subcontracted parts of that work to other
companies. But the US Government can change its mind at any time,
notify Lockheed, and Lockheed will have to stop work (within a few
days, as specified by the contract or "a reasonable time"), notify the
subcontractors to do the same, and they will only be paid (time and
materials plus agreed-on profit) for the work done to date.
If this really matters to you, you should see a lawyer.
--
Barry Gold, webmaster:
Conchord: http://www.conchord.org
Los Angeles Science Fantasy Society, Inc.: http://www.lasfsinc.org
Deadrat
3c4347...@m16g2000yqc.googlegroups.com:
The point is that New York City gets the utmost flexibility in
contracting services for its hospitals.
Oh, you mean what's the *benefit* to *you*? None. Why do you think that
matters?
There are two "points" to having a contract.
1. As a means of spelling out the obligations for each side so as to
minimize any misunderstandings and maximizing a successful exchange, in
your case, services for money. The city will get to tell you what, how,
and when, things you want to know as well. You will tell the city how
much to pay you in return.
2. As a mechanism for adjudication when one party thinks the other has
failed to shoulder his obligations.
To be realistic, though, 2 isn't really practical for a small business
owner dealing with New York City. Take your winning bid and divide it by
the cost per hour of a New York City attorney. Start the denominator at
say, $300. How long do you think you can fight city hall? Show your
work. You may ignore fractions of an hour.
If you've done the long division correctly, you'll see that the point of
having a contract is 1.
> Do I have the same rights? It's not spelled out in the contract.
Of course not.
***I am not a lawyer, so this can't be legal advice.***
***I don't live in NYC, so you may ignore my advice not to live there.***
Deadrat
> Grip <gr...@cybermesa.com> wrote:
> [OP received a contract with the following clause]
>>Contractors: Please note termination clause
<snipped: standard termination clause/>
>>So what's the point of a contract if they can cancel at any time? Do
>>I have the same rights? It's not spelled out in the contract.
>
> It depends on what other language is in the contract. If that is the
> _only_ language about termination, then I would say there is no
> contract because the hospital isn't giving up any rights (the classic
> definition of "consideration"). It seems to say that they can just
> tell you, "sorry, we've decided we don't need your services, goodbye"
> and not even pay you for work you've already done.
No, the definition of "consideration" is what the hospital exchanges for
the contractor's services. No doubt this is money. And the termination
clause most definitely doesn't say that the hospital needn't pay for
services rendered.
<snip/>
> If this really matters to you, you should see a lawyer.
If it really matters to the OP, he should seek contract work elsewhere.
This is pretty standard stuff, and the city of New York has far too much
inertia for the contractor (with or without legal counsel) to effect a
change to his benefit.
Bob
wrote:
If you want termination rights, ask the hospital to modify the
contract before you sign it. Whether you *need* termination rights
depends on your contractual obligations; in other words, what
obligations would you need to terminate?
A lot of these kinds of contracts depend on the custom in that
particular industry. If the hospital's contract is relatively
standard, they would be less likely to be willing to modify it. Many
companies hate modifying their contracts. Just like in everything
else, the more powerful entity usually has the upper hand.
This is a business decision and a legal decision. If you refuse to
sign without a modification, you may lose the contract. If you sign
without modification, you may have trouble down the road.
As an aside, I would be slightly troubled by the written notice part
of the termination clause as it doesn't specify how much notice the
hospital has to give you. I'm also unclear as to how they would
terminate the contract "in part" - any part? some sort of project?
You should consult with an attorney, at least for the legal part.
Stuart A. Bronstein
> Grip <g...@cybermesa.com> wrote:
>
>> So what's the point of a contract if they can cancel at any
>> time? �Do I have the same rights? It's not spelled out in the
>> contract.
>
> Termination clauses do not have to be mutual in order for a
> contract to be valid and binding. The "mutuality" requirement
> of a contract means there must be _some_ obligation on both
> sides, otherwise the contract is illusory and a nullity.
Right. If the ability to terminate is completely arbitrary, it seems
to me it would be an illusory contract. Based on the language I'd
imagine a court would say that any termination would have to be based
on good cause. That doesn't mean necessarily a breach by the
contractor, but they'd have to have a good reason other than they
just felt like it.