Coops Must Take Care In Negotiating Vendor Contracts

This week's Sunday Times has an article emphasizing what real estate lawyers have known for years, that coops are often less careful than they should be in negotiating vendor contracts.

The article, found at http://www.nytimes.com/2005/11/13/realestate/13home.html, discusses a recent case where a laundry room contract clause, giving the vendor a right to match a competing bid, even when there wasn't one, and to continue providing services until there was, constituted an unreasonable restraint, and was invalidated.

While the case was interesting, by itself, its real value is as a wake up call to coops who are required to negotiate vendor contracts of different kinds as well.

Since coop boards are routinely in the need of outside vendors and habitually take a great deal of time in selecting them, it behooves them to allow their counsel the latitude to make sure they are not locked into a deal which may look like the best option at first, but may prove not to work out as hoped.

As the Times article points out, the devil is not only in the vendor selection process, but in the contract details as well.

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