The MHEDA Journal - First Quarter, 2014 - (Page 25)
"We have been seeing more purchase orders from customers lately that have
ridiculous terms and conditions. A lot take the responsibility of an accident,
etc., off of them and on to us vendors - even if we had nothing to do with it.
These purchase orders are coming from large corporations. Some of the terms
are not actually on the PO. You have to go to the website to download them.
How are you handling this? Do you walk away?"
Michelle Cooper, Sales Department Manager, Lift Truck Sales & Services, Inc., Knoxville, TN
Mark Milovich, President
Lift Atlanta, Inc.
This is a constant and ongoing
battle, and these days it seems to be
ever more prevalent. Sometimes it is a
scary proposition to "hold your own"
against large corporations for fear of
losing business, and inevitably some customers will take
the stand of "it's our way or no way." When it comes to
the protection of your own dealership, you can never be too
careful, and sometimes you have to be downright selfish.
It's OK to give in on some things, maybe an extra week or
so on payment terms, but when it comes to liability, and
specifically indemnification, you can never be too careful.
On such issues, we hold our ground fiercely. Under no circumstances will we agree to an indemnification where my
company is asked to forfeit our rights, or hold a customer
harmless for their negligence. We will only hold harmless
on the direct dealings we have with the end-user that are
within our control. There is no order big enough or profit
margin large enough to take on the risk you mention. We
have lost some orders due to our stance, yet we find more
and more these companies just want to see what they can
get away with, and a with a little resistance, will negotiate
down their terms. One case in particular - a few years
ago we received such a contract as you detail from a large,
well-known national retailer. Our initial response was
"no," we did not agree to their terms and spelled out the
specific paragraphs we would not accept. They came back
with an "it's this or nothing" attitude. We said, thanks but
no thanks, and walked. About six months later they asked
us to reconsider - my response was our position had not
changed. By the end of it, and about a year later, we had
them re-write about 90 percent of what we were not comfortable with, and we secured the business. And this was
from a company that has a very hard reputation of "our
way or no business," so it can be done.
The other variable not to overlook is your sales staff.
Under no circumstances, in our opinion, should sales staff
be permitted to negotiate sales terms. If a customer wants
something other than what our standard terms are, it must
have approval from upper management prior to us accepting
the order. There is just too much liability out there and you
have to really reign in sales staff from making agreements
on terms that are not acceptable.
It's your company, and it has to be defended as strongly
as you would protect your own child. Is an order - any
order - worth being dragged into court over? Even if the
event in the terms you are being asked to accept has never
happened before and has a remote chance of happening
ever, there is always a first time! Don't be afraid to hold
your ground and defend your company. And always ask
and insist on a reciprocation of the indemnity clause if it is
not clearly spelled out.
Scott Lee, President
Conveyor Solutions, Inc.
I could spend hours talking about
this. The simple answer is, YES.
As companies continue to look at
ways to cut costs, mitigating risk is
now high on the pecking list. They feel
if they move the liability to a third party, their ultimate cost
of doing business will be lower.
However, what they don't realize is they will still be named
in a lawsuit, and have to defend it, etc. The only ones making money (which in turn costs the company money) are the
attorneys who write, review, and negotiate over the terms.
We accept risk in some cases (when we know we have
complete control of the outcome) and turn down jobs when
there are too many variables. We will also never accept a PO
when the terms state we may be liable for costs associated
with lost production.
the MHEDA Journal | First Quar ter 2 014
Table of Contents for the Digital Edition of The MHEDA Journal - First Quarter, 2014
From the Desk of Liz Richards
MHEDA’s 2014 Board of Directors and MBOA
Ask Your Board
MHEDA Member Profile
Material Handling Forecast
Industrial Trucks Forecast
MHEDA: 60 Years of Moving Members Forward
Don Chance Retires From NMHG
The New and Improved 2014 MHEDA Disc Report
Spotlight on Association News
MHEDA University Calendar
Index of Advertisers by Product Category
The MHEDA Journal - First Quarter, 2014