Contracts for the Pest Control Industry
By Greg Crosslin
It’s Time to Fix Your Contracts!
The issue of termite contracts has become a hot topic for Florida Pest Control Operators. An amendment to Chapter 482.227 becomes effective October 1, 2003. Pursuant to these changes, new requirements will apply to ALL contracts issued after this date. Accordingly, many contracts currently in use may be considered "illegal" after this date.
While I have spoken for years about the need for "customized" contracts, updated annually, it appears that now, pest control operators really have no choice but to update their contracts. I believe, as Martha Stewart says, "This is a good thing." In this day and time, with lawsuits a business probability, contracts should clearly set out the terms and objectives of both the pest control operators and the homeowner. If you have not reviewed the revisions to Chapter 482, put your copy of this magazine down right now and get yourself a copy and read it. If you have, you should recognize the need to be very productive in updating your contracts.
Statutory changes aren’t the only reason to revise your contracts. Changes in the insurance market regarding claims, lawsuits and losses have also impacted our industry. We need, now more than ever, to appreciate the demands on our business practices. You can’t buy a car, even with cash without signing a detailed contact. Take a look at a rental agreement, a lease or even your cable subscription agreement. Our society has grown to one that "requires" written agreements that attempt to cover virtually every potential event imaginable. We cannot ignore the fact that lawsuits happen. We must understand that our contracts really are the basis of all our operations; it is the very heart of our business. We should take the time now to fix our contracts!
So, we need to revise our contracts to meet the statutory minimum requirement which include, at the very least, the following changes:
On the first page, in bold print, the contract must state:
a. It is for repair and re-treatment; or
b. It is for re-treatment only; or
c. That no warranty or guarantee is offered; and
d. Whether any disclaimers are included in the contract (which does or should be included virtually in all contracts);
e. Whether any limitations are included in the contract (which does or should be included virtually in all contracts);
f. Whether any conditions are included in the contract (which does or should be included virtually in all contracts);
g. Whether any exclusions are included in the contact (which does or should be included virtually in all contracts);
The stated purpose of the legislation is to assure "...that contract language describing a ‘guarantee’ or ‘warranty’ is clear and easily identifiable for the protection of consumers and licensees." In support of this intent, the legislation further requires:
a. That contract sections describing any disclaimers, limitations, conditions, or exclusions regarding the pest control operator’s obligation to repair or re-treat the property must contain headings in bold print;
b. That contracts which contain a disclaimer, limitation, condition or exclusion regarding a pest control operator’s obligation to repair or re-treat the property, may not use the term "full" or "unlimited" together with the term "guarantee" or "warranty."
Thus, the Florida Department of Agriculture & Consumer Services and the legislature have indicated the need for changes in pest control contracts at least as to these issues. I believe there are some other areas you need to review for your protection as well, including the use of "conductive conditions" which should be clearly set out in your contract.
There are several basic clauses that must be included in all contracts and there are many items that are beyond the scope of this article. I will address herein the very basic needs that every contract must have in order to properly serve you and your customer. First of all, your contract should say what you mean and you should mean what you say. Does your contract do this? Your contract is your guideline and the heart of your business. There is nothing about your business operations that does not arise from your contract in some way; thus, you need to analyze the following: (1) What does your company have to sell and is this being properly delivered in your contact?; (2) What does your contract tell your customer; and, (3) What does your contract tell your employees about what you are supposed to do at the customers residence? Once you have determined this, does your contract clearly communicate this in plain language?
Your contract should convey a number of things. First, it should convey your service commitment to your customer. It should explain the "partnership" you have with your customers, your operations’ philosophy and exactly what you are going to do for your customer. This should be in simple language and should explain the treatment pursuant to the EPA-approved manufacturers’ label as well as State and/or local regulations. The contract should also clarify what the customer is obligated to do. Obviously, this invokes the issues surrounding conducive conditions and exclusions regarding changes or alterations to the structure, home maintenance, and other items. These issues need to be clearly written and understood based upon the new requirements with regard to exclusions and disclaimers and the fact that these are conditions on the contract. Additionally, payment of invoices and the consequences for non-payment need to be explained in your contract as well.
One thing that has met with a lot of questions lately is the length of the term of the contract. Therefore, consider these questions: (1) What period of time will the contract be in effect? (2) Will this be a lifetime contract? (3) Will the contract be restricted to one year, four years, five years, nine years or what? Whatever term you choose, you need to have a rational basis for it and it needs to be tied to a sound business operations philosophy. After all, who is guaranteeing you that any product will last for the "lifetime of a structure" or, for that matter, that it will last from four to nine years? This information should be clearly stated.
Contracts should also contain a section with regard to chemical sensitivity and/or health- related issues. This goes well beyond exposure to termiticide and now involves many health-related issues including HIV and other volatile health issues.
If you are going to have a mediation or arbitration agreement this also needs to be clearly spelled out in your contract. There are specific requirements to make arbitration binding that must be in your contract.
Finally, exclusions with regard to stucco below grade, wood below grade, grade problems, leaks, moisture intrusion, construction defects, etc., all need to be addressed clearly and concisely in your contract.
In light of the new statutory changes there is absolutely no reason not to be able to address your contracts as to all these and other issues which are pressing. Everyone knows how serious the insurance market is and how often members of our industry are getting sued, even when they have done nothing wrong.
There is no reason for any excuse. Now is the time to revise your contracts to meet the demands of not only statutory changes but also the current business environment and to give you a fresh customized contract tied directly to your operations. No more copying your friends contract which can lead to the adoption of clauses you may or may not understand. Now is the time to get all of your contracts in order. I have been saying this for a long time and now the legislature has mandated compliance. Do not miss this opportunity, and by all means, do not fail to comply with the new statutory requirements!