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Management And Training

Breach Of Contract

September 19, 2010
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Editor''s note:

Contracts specifying what work is to be performed at what times for an agreed upon compensation are common in the JanSan industry.

Contracts provide peace of mind for customers and act as a fail-safe for contractors in the event that one party does not fulfill the specifications of the document.

However, if contracts are to be dismissed and their terms not strictly adhered to, one has to wonder what all of the time and effort are for.

Contract breaches can be dealt with in numerous ways, including taking no action to force adherence and taking the matter to court.

A recent discussion on the CM/Cleaning & Maintenance Management Online™ Bulletin Board served as an open forum to discuss how to handle clients who breach their cleaning contracts.

Posted by:
Melissa Jent
3/29/2010

I have two clients who have breached our written and signed contracts. The first one is a restaurant that I have had since 2004.

They sent me a letter stating "they can''t afford to pay me anymore" and gave me 30 days. This contract does not expire until August 23, 2010.

The second is a doctor''s office I have had since 2003. A new office manager came on board in 2008 and started adding extra duties, but no extra money. I wouldn''t allow the extra duties — they weren''t just little things either — to be done without being paid.

I did them one night and it added almost two hours to my original cleaning schedule. At the time she was telling me to do all of these things, I tried to get her to do a new cleaning schedule, but she didn''t want to do that.

They also sent me a 30-day termination letter. This contract did not expire until July 2, 2010. The new office manager stated she nor the doctor signed a contract, which is true.

But, the acting office manager at the time did. I tried to explain the contract was not with her nor the doctor, but was between Precision Cleaning and the property manager. She just didn''t get it.

My contract does not give a 30-day out; the only way you can get out of the contract is either by not renewing it on the anniversary date or for non-performance of work set out in the cleaning schedule that is attached.

This portion reads, in short, as: Termination for non-performance can only be done if a detailed written description is mailed certified to us. Then, we have 30 days to fixe any deficiencies. If they are not fixed in 30 days, then a 30-day termination notice is sent, again certified mail.

In both cases, none of these procedures was done. The doctor''s office actually took my keys the next day that we showed up to clean. Between the two breaches, I lost roughly a total of $16,000.

Can someone help me out here and tell me basically what steps to take and what I should do about this. That is a lot of money and I don''t want to just let it go.

Responses:


Chaz Townsend
3/29/2010

The best thing you can do for your business is go out and find other clients and make up the lost revenue.

There really isn''t anything you can do. Contract or no contract, we can get fired at pretty much any time. It would not be worth the added time, frustration and money to attempt to take it to court.

If someone hasn''t or doesn''t pay you, that''s one thing. However, this is not something I would try to fight.


Rick VanderKoy
3/29/2010

We don''t operate in the same way, as our contracts have a 30-day out cancelation. But, you could continue sending them the invoices as usual through the cancellation date and, in the meantime, look for a lawyer to take the case on a contingency.

It will probably be too much hassle for them to fight it and they will likely settle with you. A moral victory is better than getting walked on.


John Markey
3/29/2010

We have a 30-day cancellation clause in our proposal — we do not call them contracts because they are not.

Our proposals are evergreen, meaning we write them and include small yearly increases for four years. Then, after four years, if we feel that we need to charge additional, we notify them of an increase.

Hey, if a client does not want us, why would we want to continue cleaning for them? They could — and would — make our life totally miserable! Life is too short.

When a client calls to cancel, we handle it very professionally: We ask that they honor our 30-day notice but do not argue about it. If they want to terminate today, so be it.

My advice is to keep the building clean as per your specifications — or even cleaner — until the last day, then move on. I would not burn your bridge. We have had a dozen clients return to us over the years after they found out about other companies in our industry.

We send a letter thanking them for their business after we stop cleaning, too. In fact, we send letters to all of our clients about twice a year thanking them in one way or another for their continued business.


Melissa Jent
3/30/2010

Ok, please explain to me: If you are not going to make people honor the contract, then why bother having a contract? This, to me, makes no sense.

Why not just have a piece of paper that says we are going to clean your building and you are going to pay us X amount of dollars? I don''t think it is going to cost me $16,000 to have this case brought to court. Sorry, I don''t agree with not holding them to the contract.

As for them taking me back, I don''t want to clean the doctor''s office. I was not terminated because of work, I was terminated because the new office manager had a power trip and wanted to hire her own people.

As for the restaurant, I don''t really want that back either. I can''t keep help there because the staff doesn''t do their part, and nobody wants to work seven days a week — and neither do I.


Ed Samson
3/30/2010

Re-read John''s comments and you''ll have mine, almost word for word. We call ours an "agreement" rather than a contract. Knowing that customers can cancel at any time, ours allows either party to cancel upon 30 days'' notice.

We''ve been canceled without notice. Customers don''t like to give 30 days'' notice and have cleaning staff with keys. Just like when many companies layoff employees, they immediately shut down computer access and have a guard escort them out the door.

You don''t want either of these accounts at this point, so just move on and don''t burn the bridges. Tell them you enjoyed serving them and please call if you can be of service in the future.

If these two accounts are a major portion of your business, you need to diversify. Don''t have all your eggs in one basket — keep this in mind this Easter Sunday.


Chaz Townsend
3/30/2010

I agree completely with John and Ed. However, I do understand that this is not the best news or what you were probably looking for.

Though it''s difficult, try not to take it personal when you get terminated. This is really difficult when the reason was not you and maybe something political and out of your hands. However, this happens.

Our company has been terminated when it was our fault, not our fault, purely political, etc. However, the best thing to do is move on and continue working hard to build your business.

I bet you pour your heart and soul into your business. When you do this, it''s hard not to let your emotions get in the way of making decisions. However, it''s vital to your continued success to focus on the positive and not spend your time and energy on a losing battle.

Like John said, these people would you make you miserable anyway. In addition, it sounds like you wouldn''t want to do the jobs anymore because they were a pain. Well, go replace them with something you would rather do!

You brought up a good point about why you should even have a contract if it can''t be upheld. I understand where you are coming from. However, that''s the way it is.

When I go in to clean a doctor''s office or something like that, I''m not really too concerned about having them sign a detailed agreement and trying to hold them to it. If they want us out, we will go.

A difference may be a large government contract in which a lot of money is invested. In these cases, there will always be a contract for both the contractor''s and the client''s protection.

Usually, you will agree to their terms and it''s very legal and can be upheld. However, we aren''t talking about something like that.


Melissa Jent
4/1/2010

Thanks everyone, I have come to the conclusion you all are right.

Willie Dorr
4/8/2010

We live and we learn. Take the advice and grow from it. Don''t take it personally — look at it as business.

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