Contracts: The Problem with Longer Terms

After posting last week’s blog Contracts: How Long is Long Enough?, we received a generous amount of feed back. There was  enough to turn the topic into a mini-series.  So this week’s blog “Contracts: The Problem with Longer Terms” is the second installment of “Contracts”.

Several qualified people responded to the blog expressing that the problem with longer contracts is not knowing whether you are going to receive the appropriate level of service.  Entering into a longer, let’s say a five-year contract is frightening because if the service provider does not provide a standard level of service, you are still stuck in the contract for the remainder of the term. Or for some providers, such as cellular service, you are given a substantial cancellation fee.

The responses to the blog are true.  How do you know what level of service you are going to be given when entering into a contract with a company for the first time? The truth is you don’t.  But what about the companies you have already seen the end of a contract with, would you be comfortable entering into a five-year contract with these companies?  Or would you still have qualms about your future levels service?  If the company changes management or ownership the level of service received could change.  There are so many variables with contracts that can change during a term.  So what if the level of service needed to maintain the contract was laid out in the contract its self?

Some suggestions from our commenters were to do just that.

“The fear for customers on longer term contracts can often come from concerns (over the long term) for the level of services that a given vendor provides. This concern can be completely removed by having concise language in the agreement that clearly spells out the level of service expected, a reasonable cure period, and a cancellation clause if the vendor does not perform.”

This would be the ideal method to extend contract lengths and be reassured that you are receiving the best level of service, but will the big wig companies go for this modification to their contract?

If you or someone representing you could lay out the level of service needed to maintain the contract for the length of the term, would you?

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