The art of the contract

Oct 1, 2002 12:00 PM, By Mark Krieger, CBT

While everyone recognizes the fundamental purpose and principles behind contracts, it is a topic rarely discussed on the engineering side of broadcast radio. This is an unfortunate lapse, considering the variety of contracts most engineers draft and endorse during their careers. What constitutes the nuts and bolts of an effective contract in a broadcast engineer’s context?

Dispelling myths

There are a couple of common fallacies about contracts. Chief amongst these is that only written contracts are enforceable. Not so. Offers made and accepted verbally or in written form (letters, notes or e-mails) may constitute a contractual agreement and could come into play should litigation later arise. Having a specific written contract that confines both parties to the terms within it will avoid this pitfall. Be careful and precise regarding your promises and requirements, while paying close attention to your client’s expectations in return � and put it in writing.

Contracts are designed to protect the interests of the parties involved.

Another dangerous misconception is that a good lawyer will find a way to remedy a disagreement after entering into a poorly written contract. While this is a possibility, it invariably becomes a question of how much it’s going to cost. A contract is a legally binding agreement between two parties, and any misunderstandings or vague terminology at the signing will remain for the duration. Thus, the time to get legal advice is before, not after the damage is done.

In the end, every contract is about protecting the vital interests of both parties. An ethical businessperson should take every step necessary to do just that when writing a contract.

The main ingredients

Every contract an engineer writes or signs should contain some basic elements. First is a list of the goods and services he commits to providing to the client. This would cover quantity and quality. For example, the engineer might agree to handle maintenance for a remote transmitter facility. Among the issues that need to be addressed is exactly what systems or pieces of equipment he will be responsible for maintaining. If an ac disconnect switch burns up, taking the transmitter off the air, is he responsible for replacing it or is the client obligated to provide an electrician to perform the service, including all outlets and service disconnects? If an engineer agrees to supply parts, he may want to stipulate that he will provide OEM items at invoice, plus a certain markup percentage. Of course, the minimum and maximum hours of service he will provide under the heading of routine maintenance should also be clearly defined. What kind of reports will the engineer provide? A good maintenance contract will spell these things out.

Another important element of the contract is delivery time frames for goods and services rendered. Some engineers tend to minimize in this area, believing that if they don’t specify schedules, they can’t be held to them. While vague language may buy the engineer a certain amount of flexibility, it can also bring problems. The law provides for certain standards of timeliness as deemed professionally appropriate. If a client believes that the service was inappropriately slow and the contract doesn’t clearly specify those terms, they may have some legal basis for litigation. It is best to specify some mutually agreeable range of parameters.

Payment rates and methods should also be unambiguously specified. Otherwise, the engineer may have completed a project for a client, only to find that the client wishes to pay them with barter items.

Designate a particular individual who will serve as the point of contact with the client. This person should be responsible for evaluating work performed, authorizing purchases or additional expenses, and providing you with all necessary information and feedback from that client. Furthermore, the engineer should define his status as an independent contractor, including his qualifications and capabilities, as well as a basic description of what tools and specialized equipment he will (or won’t) provide. Suppose a problem develops and a TDR or spectrum analyzer is needed to diagnose the problem. Who will be responsible for the rental costs? Putting it in writing will eliminate these potential problems.

Finally, there are issues of indemnification to address. Both sides need to be protected; the client from damages and claims resulting from the engineer’s errors, negligence or omissions and the engineer, from damages, fines or losses resulting from the client’s failure to act on recommendations or information he provided. In addition, the engineer should provide a statement regarding his liability insurance policy. Include something known in legal-speak as a force majure clause, which is a statement that acknowledges the possibility that forces beyond the engineer’s or the client’s control, such as terrorism or acts of god, may serve to excuse the engineer from what would otherwise be considered as a timely execution of the contract’s provisions.

Resources

Remember that because every job is different, every contract may have some unique clauses that address the special needs of both parties. In some cases, the engineer will be called on to assume all engineering duties for a station. Naturally, this will necessitate a somewhat broader contract. A sample contract is available through the SBE at no cost to SBE members. Although not intended for use as is, the SBE sample contract makes a great template for the engineer, the client and the attorney to work from.

If you don’t have an attorney already, it’s time to find one. The cost of having a contract reviewed can vary, depending on the attorney’s hourly rate and the complexity of the document, from as little as $200 to $1,000 and up. It’s a smart investment, especially if you think of it as legal preventative maintenance.

Krieger, Radio’s consultant on contract engineering, is based in Cleveland and can be reached at[email protected].

To request a copy of the SBE’s sample contract engineering agreement, follow the link on the SBE website at www.sbe.org.