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Legally speaking
1 Feb, 2008 By: Kenneth D. Morris Landscape ManagementQ Some of my clients have been with me for over a decade. Prices have increased, but I haven't changed the contract. Does it matter?
A Yes. Presumably, when you began your business over a decade ago, you set your original price based on what you believed left you with a reasonable profit margin, after deducting expenses. While your customers no doubt appreciate the fact that prices have not increased, there is nothing wrong with increasing the price — provided your contract allows for price adjustments. If it does not, you may want to negotiate an amendment or have new contracts executed with each of your customers which allow for price escalation from year to year. If the current contract runs for a definite term and is not evergreen, you might also just allow it to expire and then send customers a revised agreement. Particularly if your costs may be impacted by fuel expenses, you ought to have the contractual freedom to charge for those expenses. You might also consider having your attorney add a section allowing for specific fuel surcharges aside from price adjustments if conditions warrant.
Kenneth D. Morris, a Philadelphia-based attorney with more than 30 years corporate and law firm experience, offers information on industry legal issues in each issue of LM. Contact him via www.kenmorrislaw.com.
Note:
The above should not be interpreted as offering legal advice in any jurisdiction where such practice is not authorized. Engage competent counsel familiar with your jurisdiction when legal issues arise.
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