Comprehensive Contracts for Community Associations

A comprehensive contract is a written document in which the terms within the four-corners of that document are the sole agreement between two or more parties. An estimate is not a comprehensive contract.  By signing a written document, the contracting parties agree and acknowledge that the written document describes in its entirety the obligations of all the parties that signed it and renders any previously made promises null and void.  The value of a comprehensive contract, or at least those impacting community associations, are in the five-to-six figure range, i.e. $100,000.00.

 

Keep in mind that a comprehensive contract must include the following elements in a written instrument to be upheld as valid:

 

  1. A valid offer;
  2. Consideration, or a bargain for an exchange; and,
  3. Acceptance.

 

Generally, most comprehensive contracts also require a signature of the parties to be bound by such an agreement, as well as competency.

 

Under Ohio law, certain contracts without signatures of the parties to be bound are not enforceable. It is our advice that in order to be enforceable, the parties must sign a comprehensive contract. Remember that an Ohio Court will generally not construe an invoice as a comprehensive contract.

 

A comprehensive contract should always be memorialized in writing to be valid under Ohio law. Typically, a contract must include the following in written form:

 

  1. Introduction (also known as “recitals” or “whereas provisions”) that briefly states who the parties are and what the purpose of the written document is;
  2. Definition section that includes analysis of key terms;
  3. Clearly defined obligations of each party to the contract with an appropriate timeframe to perform;
  4. Conditions that may impact obligations;
  5. Disclosure of warranties, representations, covenants (promises), or additional miscellaneous requirements to perform (such as insurance coverage);
  6. Termination Clause;
  7. Signature block(s) for the parties who are to be bound by the contract; and,
  8. Referenced exhibits or attachments.

 

Lastly, ensure there is a clause in the contract that allows for an exit plan, or termination. Without such a clause, it is incredibly difficult to back out. As your Association explores various agreements, always be mindful of potential impacts to third parties (i.e., retaining an excavator to clean out a spill way or water way on the property which may result in violations of State and Federal Law and involve the U.S. Army Corp. of Engineers) and research/obtain necessary permits before beginning.

 

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