SHOULD YOU SIGN THAT CONTRACT? BY GREGORY S. PAONESSA ARENTFOX SCHIFF, NHADA SILVER PARTNER Automobile dealership owners make decisions each day that impact the future operations and success of their businesses. Dealers regularly enter into contracts to operate their business, and a common decision that dealers, like all business owners, are faced with is whether to agree to the contract terms as set forth in a potential agreement. Whether it is as minimal as a contract with a uniform provider/cleaning service, a detailing company or some other small vendor, or as important as a payroll provider, a dealer management service provider or even the manufacturer, dealers must be careful that they are highly critical of the provisions that govern such relationships. The importance of what many may think to be mundane, boilerplate contract terms has been highlighted in the wake of the CDK cyber incident that shut down many dealerships for weeks, causing massive losses that some dealers are learning may not be recoverable because of the fine print in their service agreement with CDK. While we hear time and again, “I’ll just sign it. What else can I do?” or “I will just sign it. What is the worst that could happen?” it should now be abundantly clear that even when presented with seemingly boilerplate contracts, you should not “just sign it”! There is more you can and should do. Here, we highlight some of the crucial contract terms that dealers should take a close look at, and be weary to agree to, without pushing back and fully assessing what impact these provisions could have if (or when) something should go awry. LIMITATIONS OF LIABILITY It is well established in New Hampshire that “[p]arties to a contract are generally bound by the terms of an agreement freely and openly entered into.”1 One exception to this general principle is if a contract or one of its terms contravenes public policy. An agreement or term is against public policy “if it is injurious to the interests of the public, contravenes some established interest of society, violates some public statute, is against good morals, tends to interfere with the public welfare or safety, or ... is at war with the interest of society and is in conflict with the morals of the time.”2 Now what on earth does that mean? What this meant for the plaintiff/claimant in Mentis Sciences Inc. v. Pittsburgh Networks LLC was that Pittsburgh Networks, a technological support and IT services company hired by Mentis to provide services including monitoring of computers 26
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