ALEXANDRIA, Va. — The start of a new year affords many opportunities for businesses, among them the acquisition of new customers.
At the heart of these partnerships lies a document outlining the responsibilities that both parties must adhere to—a contract.
The Textile Rental Services Association (TRSA) explored this topic in relation to the textile rental services industry in a recent webinar titled What’s New in Customer Contracts for Textile Services Companies, which featured Steven John Fellman, member of TRSA’s general counsel and attorney with GKG Law.
“When negotiating agreements, you’re going to have complaints,” says Fellman, stressing the importance of keeping records of complaints, and most importantly, how the company responded.
“It’s important that you have this kind of record, because in the event that somebody sues you or alleges breach or failure to provide adequate service, you want to be able to [provide proof].”
Another way to eliminate litigation would be to periodically visit the customer and create a line of communication, adds Fellman, saying that linen customers should be given the name of a specific point of contact.
“Giving the customer that kind of information is something that the customer wants to see,” he says.
OTHER LEGAL ISSUES
One legal issue that operators can run into is a third party inducing a customer to breach his/her contract with a current service provider.
“This means that you cannot go to an account served by another textile services company and offer that customer a lower price if the customer throws out the competitor,” according to Fellman.
However, there can be special cases. “If the customer initiates the contact, that means if the customer calls you up, you don’t have to ask whether the customer has an account with a competitor. And, legally, you can serve the customer even if you know that the customer has a contract with a competitor.”
Something else that operators can do is visit a customer and express interest in serving their account once the customer’s contract with the competitor expires. In this case, however, Fellman advises operators to not act as a lawyer for the prospective customer.
“Let the customer get his own lawyer. What’s going to happen in those cases is the competitor is going to sue you and … the customer. And the customer is going to realize that unless he proves that you’re the problem, the customer is going to be liable and … is going to turn on you.”
One other legal issue to avoid: violating allocation and antitrust laws.
“You can’t sit down with a competitor and say, ‘I won’t take your customers if you don’t take my customers,’” says Fellman. “You can’t sit down with a competitor and agree on a price … and say, ‘You take the east side of town and I’ll take the west side of town.’”
THE MOST VALUABLE ASSET
“In litigation, the only winners are the lawyers,” says Fellman, saying that lawsuits are expensive and require use of valuable company resources, and may take years to resolve.
To curb this, Fellman stressed the importance of creating “a system for identifying potential problems before the customer becomes so unhappy [he/she] wants to quit,” as well as addressing customer concerns promptly and fairly.
“You have to know that in dealing with your customers, they’re your most valuable asset and you have to protect them and have contracts that are reasonable, that are meaningful, that are enforceable.”