I write this final quarter report on the back of a review I have just completed regarding a contract signed by another body corporate management company on behalf of their client. Unfortunately, the client never saw the contract before it was signed on their behalf, and only saw the fees compared to other suppliers. In addition, the contract had a back page full of very small font laying out terms and conditions of service that had no benefit for the client. It was a three-year contract with an automatic rollover of three years if the contract was not terminated with 30 days of renewal. The problem was at the end of the first term nothing was done to terminate or review the contract and, five years on, the costs charged had doubled.
The main issue I had with this contract, however, was that it also placed an obligation on the body corporate at the end of the contract term to supply any other service proposal to the existing company and, if they matched this, they had to stay with the original company!
I have recently seen another contract from a service contractor that enabled them to claim additional payments without full disclosure of those payments to the client. As I write this, we are assisting this new client in addressing this issue, but it is not a simple process when a contract has been signed off without a full review, or proper disclosure.
My point is… it is our strong recommendation to all bodies corporate that any contract for services is properly reviewed and, if needed, legal advice sought before a contract is signed. Moreover, we would encourage committee members who approve a contract to ensure you see the final contract before it is signed.
Generally, terms and conditions that are not in your best interests can be taken out of the agreement before it is signed, as the contractor wants your business and is much more amenable to changes during negotiation than if you decide that you want to terminate the service at a later date. If you have signed up to terms that are not in your best interests, you may well find you have no ability to simply terminate and walk away, as you may find liquidated damages and other costs follow!
For any advice, or assistance on these type of matters, or body corporate issues in general please feel free to contact our offices – 09 320 5215. We are more than happy to help!