Learn How to Navigate the Pitfalls of Steel Building Contracts
If you need to hire a lawyer to read and explain the contract before you sign it, you should think twice before you purchase a building from the same company that gives you an incomprehensible one-sided contract.
Before you do anything, ask to see a copy of their contract. If they won’t show it to you, ask yourself, “Is this the right company for me?” If they do share it, do you understand it? Is it clear? Do you need a magnifying glass to read it? Why do they treat you like the enemy?
You are a valued customer and should be treated like one. Below are some examples of the “fine print” from an actual contract so you can learn what the legal pitfalls are in the steel building industry and how to avoid them.
Stay Off Purchase Price Escalator
Fine Print: “Further, buyer hereby agrees and stipulates that, in the event seller receives notification of a scheduled price increase from any of its suppliers between the date of this agreement and the date scheduled for delivery of the materials covered hereby, seller reserves the right, in its sole discretion, to increase the purchase price stated herein in an amount corresponding to said price increase.”
What They Really Mean: The manufacturer can increase the previously agreed upon price at any time, with no prior notice to, or recourse by, you.
Our Advice: Never agree to this. Perhaps the manufacturer’s strategy is to bury this in the contract hoping you will never read or understand it with the expectation of charging you more later. Run, don’t walk, from this steel building manufacturer. This is unconscionable.
Fine Print: “In the event of cancellation or other breach of Buyer’s obligations under this Contract, the deposit, at minimum, shall be retained by Seller as liquidated damages to cover Seller’s expenses of order processing, engineering, detailing, purchase of material, fabrication, sales commissions and any applicable incidental, consequential and lost profits damages; provided, however, that in no event will the amount payable by Buyer in connection with same be less than $2,500.00.”
What They Really Mean: You should have read and understood our contract before we pressured and rushed you into signing it. Too bad, you lose your deposit if you don’t do as we say.
Our Advice: Always read and understand any contract before you sign it. If you need to take it to a lawyer first, ask the manufacturer if they will reimburse you. If you don’t understand it, don’t sign it.
Beware the Up-Sell
Fine Print: “It is solely Buyer’s responsibility to verify that the building codes stated on the front of the Purchase Order comply with local building and insurance codes. Buyer understands and agrees that local ordinances are outside of the scope of the Seller’s knowledge and that Seller assures only that the building will meet specific loadings as stated in the Purchase Order.”
What They Really Mean: The manufacturer is saying it does not know if your building is designed and built to comply with local wind, snow and seismic requirements because it is leaving that up to you to figure it out.
Our Advice: This can be a costly provision for you, the customer. You are relying on the manufacturer to design the building to meet your local, wind, snow and seismic requirements. This information is readily available to the manufacturer. Don’t let them shift that burden to you. The manufacturer is the expert, why should you be responsible. That is what you are paying them for. When you finally figure out that the specified snow load of the building does not meet your requirements, it will often cost you tens of thousands of dollars to correct the problem. This is called an “Up-Sell” because the manufacturer will use this to Up-Sell you into a more expensive building.
Stay off the Trap Door (AKA You Pay More if the Manufacturer Makes a Mistake)
Fine Print: “Buyer shall hold Seller harmless from any loss, costs, claims, suits, damages, and attorney’s fees arising from any alleged or real injury (including death or total destruction) to any person or property which arises out of work performed or materials supplied hereunder. Buyer assumes entire responsibility and liability for any claims or actions based on or arising out of injuries, including death, to persons or damages to or destruction of property…including claims or actions founded in whole or in part upon the alleged acts, omissions or negligence of seller, seller’s representatives, or the employees, agents, invitees, or licensees thereof.”
What They Really Mean: This requires you, the customer, to pay the manufacturer for all expenses including lawsuits incurred by the manufacturer from the manufacturer’s own mistakes and negligence.
Our Advice: Never agree to this. This provision is not only unfair, but it could wipe you out financially. This means that you will have to pay the manufacturer for all losses it incurs and in any amount, even if the losses are caused by the manufacturer or its friends.
The Incredible Vanishing Product Warranty
Fine Print: “Seller warrants only that its products are free from defects in materials and workmanship on the date of shipment from its plant. The Seller’s obligations under this warranty shall be limited to repairing or replacing (but not dismantling and installing) such products which prove to be defective within one (1) year from the date of the original shipment by Seller, provided, however, Buyer has performed maintenance for the general upkeep of the building. Any products repaired or replaced shall be subject to warranty only for the remainder of the time applicable to the original warranty period. There are no other warranties, expressed or implied, which extend beyond the description on the face of this contract, including any warranties or merchantability or fitness for a particular purpose, and in no instance shall seller be responsible for any indirect or consequential damages or loss of any kind whatsoever.”
What They Really Mean: The manufacturer’s warranty is for one year from the date of shipment and there is no warranty for accessory parts, such as doors, hardware, windows and ventilators.
Our Advice: Many contracts limit the manufacturer’s liability to a fraction of the building purchase price and require the buyer to release the manufacturer from the manufacturer’s negligence. The one year warranty offered under this contract is not long enough. The manufacturer should stand behind its product. You could wind up paying your hard earned dollars for your building and be left holding the bag if there is a problem with it. Ask for the warranty and get it in writing.
We Can Make Your Life Miserable
Fine Print: “The parties agree that all disputes or matters whatsoever arising under, in connection with or incident to the Contract shall be litigated, if at all, in the District Court of [Name] County, [State], or if federal jurisdiction is mandatory, in the U.S. District Court for the District of [State] at [City]. Buyer hereby waives any jurisdiction or venue objections that Buyer may have to any such action or proceeding being brought in any such court.”
What They Really Mean: You can be sued by the manufacturer in another state. This means that they want to stack the deck against you, forcing you to travel long distances to defend yourself or assert your rights. They are hoping you will give up first.
Our Advice: All of this adds up to great cost and expense to you. Don’t let them make your life miserable. Never agree to this.
First Thing We Do, Let’s Kill all the Lawyers
Fine Print: “In the event Buyer in any manner defaults or breaches the terms and conditions of this Contract, or threatens to do same, or in the event it becomes necessary for Seller to employ an attorney to enforce any provision of this Contract, obtain injunctive relief, collect damages on account of a breach or threatened breach of this Contract, or if Seller prevails in a tort action commenced by Buyer. Buyer shall pay to Seller, Seller’s attorney fees and costs.”
What They Really Mean: You have to pay the manufacturer’s attorneys fees when they hire a lawyer.
Our Advice: This is a costly provision for you, the customer. The manufacturer will often use this as leverage to get you, the customer, to drop legitimate claims to avoid the risk of paying its exorbitant legal fees.
You Want Me to Do What?
Fine Print: In order to save time and money, the parties voluntarily waive their right to a jury trial in any litigation arising out of this Contract.
What They Really Mean: If there is a dispute, they don’t want a group of your peers to decide.
Our Advice: The 7th Amendment to the U.S. Constitution, gives each American the right to a jury trial. You should never have to waive your constitutional rights to purchase a steel building.
Think twice before purchasing a building from a manufacturer that makes it difficult for you to understand their contract using crafty legal jargon – you may not get what you thought you purchased.
