It’s common for people who run a business to focus on closing a deal. The front-and-center details are attention-getting and commonly where negotiation happens. Once both parties agree and it’s time to sign the document, it may feel counterintuitive to pause.
But if a customer is sending you a contract, you must pause and carefully review what’s in that contract before signing. Failing to do so could spell disaster for your company. 
Here’s an overview of why you should be wary and how to handle customer-generated contracts. Talk with your agent at Bone Robertson & McBride Inc. to learn more about protecting your business when considering a customer-provided contract.
Why Should I Be Concerned?
Boilerplate language in a standard contract may run afoul of your insurance protections and end up costing your company money. Never sign a customer’s contract before consulting with your insurance agent. There may be phrasing, specific clauses (e.g., defense and indemnification clauses) or terms and conditions within the contract that may not benefit your business, also increased limits of liability insurance may be needed to be purchased. Legal counsel should be contacted to review contractual terms and how they may effect your company and the cost of your insurance for the job.
What Are Defense and Indemnification Clauses in a Contract?
Indemnification clauses in a contract may be designed to offer specific protections to one party from liability if a third entity experiences harm. This clause contractually obligates one party to compensate the other party for damages or losses that could occur.
Defense and indemnity clauses shift liability for potential risks from one party to another. While the terms “defend” and “indemnify” typically appear together, they impose different obligations. Because each company and contract is different, it’s crucial to assess customer-generated agreements individually to ensure that signing won’t put your company at risk.
How to Handle Customer-Generated Contracts
Do not sign a customer-generated contract until it’s been carefully reviewed. Take time to have your company attorney and insurance agent look at the seemingly standard language included with the contract.
Carefully reviewing the contract’s language with assistance from your company’s advisors is your right. Identifying potential problems with the contract before you sign can help you protect your company from financial harm in the future.
Talk With Your Agent Before Signing a Customer Contract
Before signing a customer’s contract, always consult with your attorney and talk with your agent to make sure you understand how the language included in the contract could affect your business.
When you need help in these matters contact Bone Robertson & McBride, Inc. via email at don@brmins.com or via phone at (800) 510-1095
Insurance for the Commercial Contractors Industry