Contract Review Processes

Understanding Contract Components

What is a Contract?

A contract is a legally binding agreement between two or more parties. In the context of condominium management, contracts formalize the obligations between the condominium corporation and service providers, such as maintenance companies, condominium management firms, and utility suppliers.

Key Components of a Condominium Contract

To ensure clarity and enforceability, every contract should contain the following elements:

1. Scope of Services

   • Clearly define the responsibilities and tasks the service provider is expected to perform.

   • Example: A landscaping contract should specify details such as mowing frequency, seasonal planting, and snow removal expectations.

     
     

2. Financial Terms

   • Outline compensation structures, including payment schedules, penalties for late payments, and any additional costs.

   • Example: A cleaning service contract might include a monthly fee for routine cleaning and additional charges for deep cleaning.

     
     

3. Duration and Termination

   • Specify the start and end dates of the contract and outline conditions for termination.

   • Example: Contracts may have automatic renewal clauses or require 60 days' notice before termination.

     
     

4. Dispute Resolution Mechanisms

   • Define how conflicts will be resolved, such as mediation or arbitration, instead of resorting to litigation.

   • Example: A contract may state, "Any disputes shall first be resolved through mediation before legal proceedings are initiated."

Reviewing a Contract for Compliance

Why Contract Review is Important

Contracts must be carefully reviewed to prevent legal issues, financial losses, or misunderstandings. A poorly written contract can lead to costly disputes or unmet service expectations.

Steps in Reviewing a Contract

1. Check for All Mandatory Elements

   • Ensure the contract includes the key components outlined above.

   • Verify that all terms are clear, unambiguous, and enforceable.

     
     

2. Verify Compliance with Legislation

   • Condominium management contracts must comply with Alberta’s Condominium Property Act and related regulations.

     
     

3. Assess Risk Management Clauses

   • Look for provisions that protect the condominium corporation, such as:

     • Indemnity clauses (protecting the corporation from liability).

     • Performance guarantees (ensuring service providers meet obligations).

       
       

4. Review Termination Clauses

   • Ensure the contract includes:

     • A reasonable notice period before termination.

     • Clear conditions under which the contract can be terminated (e.g., breach of terms, non-performance).

       
       

5. Confirm Dispute Resolution Provisions

   • Mediation and arbitration clauses should be present to minimize litigation costs.

Applying Contract Review Skills

Practical Application: Compliance Assessment

Now that we understand how to review contracts, let's apply this knowledge through a step-by-step compliance assessment:

1. Use a Compliance Checklist

   • Create a checklist to verify that the contract meets all required elements.

   • Example Checklist:

     • Is the scope of work clearly defined?

     • Are payment terms specified?

     • Is there a dispute resolution clause?

     • Does it comply with Alberta’s condominium laws?

       
       

2. Case Study: Identifying Contract Issues

   • Scenario: A condominium board has signed a contract with a security firm, but the contract lacks a clear termination clause.

   • Task: Analyze the risks this presents and suggest how to revise the contract to include a termination provision.