Hello, and welcome to today's webinar. Our speaker today is James Waite from the Waite Law Firm. Before I turn it over, oh, I'm sorry, and also with us this morning, excuse me, is Brian McGuire, President and CEO of AED. Before I turn it over to Brian, I'd like to let those of you who are live with us know that you may submit questions during the webinar via the chat box in the lower left side of your screen. The slide deck from today's presentation will be available as a PDF in the handouts tab of the webinar homepage. This webinar will also be recorded so that you may watch or re-watch on demand at your convenience. And with that, I will turn it over to Brian. Thank you, Liz. I want to welcome everybody to today's webinar, Legal Issues for Equipment Dealers. It is certainly AED's pleasure to have James Waite present to all of you today. One of the recognized experts in this field, and I believe we'll all find his information very timely and informative. This is part of AED's continuing effort to provide meaningful and useful information during the pandemic. And if there is an issue you would like to see us cover, please reach out to your regional manager and we will look into doing that. Without further ado, let me turn it over to James Waite. Thank you, James. Great. Thanks, Brian. And thanks to all of you for attending, and of course, thanks to the AED for putting on this timely webinar. I'm going to break this presentation into five segments. First, manufacturer relationships with two sub-segments, dealer agreements and dealer laws. Then order cancellations and terminations, third, force, measure, and acts of God, fourth, potential liabilities with respect to both sales and rentals, and five, how to protect your businesses and your assets. As Liz mentioned, we'll be glad to take questions at the end of this presentation, time permitting. If we run out of time, feel free to email your questions to me at info at jameswaitelaw.com. Okay, so we have a lot to cover in this hour. Let me jump right in. As you know, the world economy is in crisis as a result of the coronavirus and the resulting stay-at-home orders and business shutdowns. The coronavirus first reported in Wuhan, China, has spread quickly throughout the world. As of today, total confirmed cases numbered over 2,130,000 worldwide, resulting in over 137,000 confirmed fatalities. 464,300 cases had been confirmed in the United States, resulting in 28,640 fatalities, tragically enough. Interestingly, although the virus appears to have originated in China, cases there peaked in mid-February and then declined to near zero. Of the 82,295 confirmed cases there, 77,816 people have reportedly recovered. And as of last week, China has lifted its travel ban, and countries throughout the world, including the United States, have begun contemplating doing so themselves in the next few weeks. Impacts of the virus on economies and stock markets throughout the world have been significant, resulting in enormous, if temporary, rises in unemployment and substantially reduced GDP growth throughout the world. But as of yet, as indicated by the OECD's most recent chart of world economic growth forecasts, they don't appear to have resulted in the catastrophic declines feared by many. In the U.S., however, they did result in surges in jobless claims in March, with over 20 million people reportedly now on the unemployment rolls as of today. And as you can see, the impacts on stock markets throughout the world have been profound as well, though over the last week, the markets appear to be rebounding significantly, which may provide an indication of how Wall Street really feels about how much longer shutdowns are going to last. Drilling down, the IMF projects a global economic contraction of 3% this year, up to $9 trillion in COVID-19-related losses. U.S. retail sales fell by a record 8.7% in March of 2020. The ARA is now forecasting a 16.6% drop in rental industry revenues for 2020. Canadian rental revenue is projected to fall by 11.3% this year. And by at least one measure, U.S. construction is expected to decline by 15.7% in 2020, not rebounding until 2022. More importantly for all of us, the impacts on the equipment industry have been considerable. Overall, the industry has been off by roughly 27% from January through March, and most industry analysts currently maintain sell or reduce recommendations on the public players in the space. Nonetheless, the equipment industry appears to be rebounding to a degree as well, though predictions for the coming 12 to 18 months are mixed. Interestingly, I checked yesterday, Credit Suisse is maintaining outperformed ratings actually on 12 of the 22 companies they track in the sector. From a legal perspective, if history is any indication, and I think most of us remember the last downturn, we can expect to see increases in order cancellations, delivery delays, equipment rejections, slow and late pays, customer bankruptcies, in some cases theft, and of course, increased litigation. As we'll discuss more in a few minutes, the fact that we're currently in unfamiliar waters legally on several levels will likely only add to the issues. But again, the news isn't all bad. Somewhat confusingly, at last check this morning, Caterpillar stock was trading above 110 a share, up from a low of 87.50 in March, and its dividend yield at 3.54% remains considerably higher than the S&P 500 average. And most of our clients and other industry participants I've spoken with feel construction and construction spending are likely to rebound quickly in Q3, Q4 of this year, perhaps quite a bit faster than the media or market observers readily concede as of yet. Also, it bears mentioning that sales by Chinese OEMs, which as you know, were severely punished in January and February, hit record levels in March, according to the CCMA. And as most people in the industry already know, the Trump administration is pushing a $2 billion infrastructure plan. Interest rates are at historic lows, cash is being pumped into the economy, and few people believe the current shutdown will last as long as the Great Recession of 2008 to 2010 did. So, as I said, the impacts on the equipment and construction industries have been substantial and have rippled throughout all segments within the space, impacting sales, rentals, finances, payments, and vendor and supplier relationships, to name a few. As these impacts have manifested, we've noted in our office that a number of related issues have arisen, such as heightened competitive concerns amongst both OEMs and dealers, and a markedly increased focus on contracts and contract obligations by all parties in the chain of distribution, everyone from OEMs to parts suppliers to dealers to buyers and lessees. And legally, as I said, we're in more or less uncharted waters here. As most of you know, courts around the country have shut down in response to the coronavirus panic, along with everyone else. So, we're not getting the benefit of any judicial interpretations right now, whether regarding contracts or any other legal issues, for that matter, and we probably won't for at least a few months. So, we're going to have no choice but to make some educated guesses about how the courts are going to deal with some of these issues. We'll discuss more about that in a few minutes. For present purposes, we're addressing an avalanche of questions from our clients, including most notably, can I delay my purchases? Can my customers delay theirs? Can I sell competitive equipment? Can I rent my equipment, given the terms of my dealer and financing agreements? How can I do that more effectively and where? What other revenue streams are available? How can I avoid order cancellations? What are the risks? What happens if one of my customers declares bankruptcy? And lastly, how do I protect my business and my business assets generally? I'll try to get through as many of these as I can in this presentation, but again, if you have additional questions, don't hesitate to email us. The upshot is, we expect some fairly choppy waters over the next six to 12 months. For some of our clients, one of the most pressing current issues is attempts at contract delays and cancellations, whether by customers, vendors, contractors, suppliers, service providers, or others. As you know, this is happening throughout the country, particularly in harder-hit areas where jobs have been delayed and oftentimes it's become impossible to pull permits. So let's start there and then move to some of the other longer-term issues we're encountering and what you can do about them. First, many cancellations or delays are being premised on claims of acts of God or force majeure, literally greater force, that prevent contracting parties from performing under their contracts. With respect to force majeure claims, courts place the burden of establishing the conditions of force majeure on the party invoking the provision. Critically for dealers, a force majeure claim can only exist if your contract allows for it. Courts generally do not imply such provisions. Therefore, unless your contract contains such a provision, this won't technically be an issue. If your contract does contain one, and you'll find that many of them do, and virtually all of them will from this point forward, know that courts tend to be conservative about enforcing them. Most enforce them only as written and do not give them broad readings or implicitly include events not specified. If you see that kind of a provision in one of your contracts, read it carefully, as it may not necessarily exclude the other party or you for that matter. Historically, impossibility for contracting purposes meant that it was literally impossible for one of the parties to perform its obligations under a contract through no fault of its own. Impossibility could exist whether or not a provision to that effect was included in the contract. It would simply be implied as part of the existence or as part of the interpretation of the contract. This is something like a requirement that you deliver a piece of equipment to a party during a subsequently mandated stay-at-home order, one that applies to you. Importantly, a temporary impossibility, like a shutdown, suspends the duty of the promisor to render the performance promised only while the impossibility exists. It does not eliminate the performance obligation altogether. Some jurisdictions interpret impossibility more broadly as not only strict impossibility but also as including, in quotes, impracticability or extreme difficulty because of extreme and unreasonable expense. Thus, some courts might focus on whether the effect of the pandemic on the economy made performance extreme and unreasonable. But again, given the lack of clear precedent, as well as the vast differences in both circumstances and interpretations from one contract, not to mention one jurisdiction to another, some contracting parties might have more luck with this type of claim, particularly if their performance has been rendered illegal or substantially more difficult or expensive as a result of a legally mandated shutdown. But that is by no means a certainty, and such claims might just as easily be defeated if the applicable contract contains the necessary terms. You may also encounter or wish to make frustration of purpose arguments. Frustration of purpose is a concept that originated under old English law, which generally provides that after a contract is made, if a party's principal purpose is substantially frustrated without his or her fault by the occurrence of an event, the non-occurrence of which was a basic assumption of the contract, the customer's remaining duties are discharged, unless the language or circumstances of the contract indicate to the contrary. Obviously, this type of legal theory tends to raise a number of other questions, not least of which is, what was the real purpose of the contract? For example, was it the completion of a sale or rental, or was it the completion of a job? It depends on the circumstances of the contract and the language of the contract itself. Again, given the scarcity of precedent on these issues, we're going to get some pushback, and we expect some of these claims to be litigated, but ultimately, as I said, in the absence of the existence of a statute or some clear judicial precedent, winning or losing is very likely to turn on what your contract says and very little more. These issues and a number of others have prompted business owners throughout the country to take another look at their most critical contracts, including, of course, for your purposes, their dealership agreements. Among other things, we've been fielding a wave of questions regarding what they require of dealers in terms of facilities, equipment purchases, stocks of parts and supplies, marketing, staffing, warranty work, exclusivity, and other issues. They've also been raising a number of questions regarding termination and buyback rights and obligations of OEMs. Many of these issues are addressed in the applicable dealer agreements, but as often as not, they are left unaddressed or only partially addressed, or they're actually addressed in a way that directly conflicts with the state's dealer statute. This is driven in part by the fact that so many of these agreements are simply boilerplates that have been generated in a jurisdiction where they would have effect, but ultimately in a state where possibly a new statute has been enacted that conflicts with the dealer agreement. Consequently, one of the questions we get most commonly is, which controls, the dealership statute or the dealership agreement? The answer is that the dealership statute usually controls, but that isn't always the case and the level of control as well as other statutory requirements can vary dramatically from state to state. For example, California's dealership statute automatically voids any provision that requires the application of any other state's laws to dealerships located in California and goes on to dictate a number of the material terms of such agreements, including importantly, the OEM's repurchase obligations upon termination. Contrast that with Pennsylvania's dealership law, which does not address the application of other states' laws and expressly provides that in the event a dealer terminates a dealer agreement, the obligation of the OEM to repurchase equipment, parts, and tools shall be governed by the terms of the dealer agreement and not by the provisions of the statute. This is only the tip of the iceberg. State laws differ so much with respect to so many different issues in this regard that it is virtually impossible to harmonize dealership agreements across state lines with any real meaning. Ultimately, it becomes necessary to scrutinize the agreement's provisions and the applicable state laws with respect to each item at issue, but in times like these, doing that can be invaluable, something I'd strongly recommend for anybody with questions about their agreements at this point. And lest we forget, if you find that your state dealer law doesn't apply, don't stop there. Your operation may very well be governed by franchise law, recalling that dealerships are merely a subset of the much broader franchise concept. Separately, we're also seeing a considerable increase in the number of questions we're getting regarding sales and leases to customers, many for the reasons I previously outlined, however with some important differences. Contracts with customers are not, of course, subject to dealer or franchise laws, and because the vast majority of them are entered into between dealers and other businesses, only rarely do we encounter consumer protection type statutes that bear heavily on such relationships. Florida, Texas, and New Jersey come to mind as examples of states that do extend some consumer protections and protection type statutes to businesses, sometimes in ways that effectively avoid contract provisions that would otherwise be enforceable in other states. So what that means is the application of the laws in different states is anything but uniform, but for the most part, the contracts that are signed are the contracts that are enforced. That's one thing we can generally count on, with the exception of what I said before about dealership statutes and how they might impact upon dealer agreements. But remember that what we're talking about here is business agreements between dealers and their customers, state dealer statutes aren't going to stop that. Occasionally, those kinds of contracts are enforced without modification, save only for extraordinary circumstances if they're properly written. Occasionally, we'll see circumstances where evidence of outside representations and warranties or extraneous agreements are brought in, but that's far from the norm. So certainly, paying close attention to your contracts with the people from whom you buy, as well as with the people to whom you sell and or lease, is the critical first step in dealing with commercial obligations. But what about lawsuits? Aside from knowing what the party's financial and performance obligations are under their contracts, how can those same contracts be used to defend you, or in some cases, to strengthen your claims if you find yourself a plaintiff? Well, first, you need to know what the basic sources of claims are. In broadest terms, there are two, breach of contract claims and tort claims. Breach of contract claims are what we all think of when we sign contracts, things like performance and payment obligations and failures and the claims that arise from those. These claims tend to be limited, and more often than not, they aren't covered by insurance, which, among other things, means you'd better make sure your contract says what you need it to say in order to make sure you win and recover your attorney's fees. Tort claims, on the other hand, are more often overlooked when it comes to negotiating and writing contracts. Those are claims for civil wrongs, in quotes, like negligence and strict liability for things like personal injuries, property damages, and associated economic damages that tend to arise from things like accidents and delays. As you know, these claims can be very large and are often the types of claims that are covered by liability and property damage policies, at least in part. We'll talk more about that in a minute. Breach of contract claims, as I mentioned, cover things like performance and equipment failures, defects and malfunctions, as well as breaches of express, written or stated, or implied, which is to say unstated but assumed under the law, warranties, like merchantability, fitness for a particular purpose, suitability, freedom from defects, et cetera. Fortunately for dealers, most of the potential damages associated with these types of claims can be limited, eliminated, or shifted to others under your contract, but only if your contracts are properly written, which in most cases starts with knowing what you need to negotiate going in. For example, in most states, two of the issues you'd always pursue under contracts with customers are one, a waiver of exemplary and punitive damages, and two, the ability to recover your attorney's fees if you have to sue, though you might not want to make the obligation to pay attorney's fees reciprocal. Well, if you're in Florida, you can't get a waiver of exemplary and punitive damages because Florida law prohibits it, and it might cause a court to throw out your entire waiver and indemnity clause. If you're in North Carolina, one-way attorney's fee clauses aren't enforceable now under a new statute. So you must include a statutorily prescribed bilateral attorney's fee clause if you want to be able to recover attorney's fees at all. Now those are just two examples of dozens throughout the country, and these issues are layered on top of the multitude of differences among specific dealer and franchise laws we discussed earlier. It's device to say that negotiating contracts effectively anyway involves a lot more than just getting the commercial terms correct, though that, of course, is also critical. A typical breach of contract claim tends to start with something like this. You, the dealer lessor, were obligated under the contract to provide me with equipment that met certain standards on a given date, and you failed to do that. If the plaintiff is right, unless there are protections in the contract that limit the plaintiff's associated claims, the defendant is generally looking at being liable for, A, direct damages, those which apply directly from the claim breach or misconduct, such as amounts paid for allegedly defective equipment, B, incidental damages, costs actually incurred by the plaintiff in connection with the claim breach or misconduct, such as the cost of storing and or returning defective equipment, C, consequential damages, those that arise in connection with a claimed breach or other alleged misconduct, this might be things like lost profits or delay damages, and possibly attorney's fees, the plaintiff's. Again, however, depending on which jurisdiction's laws apply, you may be able to limit or eliminate many of these types of claims through your contracts. Claims like warranty waivers, documentation of examinations and inspections, waivers of incidental and consequential damages, and exclusive remedies can go a long way towards enabling you to prevail in a lawsuit, and perhaps more importantly, they can also go a long way towards helping you avoid being sued or having to sue in the first place. We'll talk more about that in a minute. But we still need to discuss the second, much larger liability issue, port liability. Liability for civil wrongs, such as negligence, failing to do something a reasonable person would do, or doing something which a reasonable and prudent person would not do, and products liability, particularly design, manufacturing, and warning defects can be ruinous, especially if it isn't properly covered by your contract and or not fully covered by insurance. Protecting yourself from negligence claims turns on knowing what such claims consist of. So let's go down the list. The existence of a duty, think of things like the duties to properly inspect and, if necessary, repair equipment, a failure to satisfy one of those duties, resulting harm to the plaintiff, and proximate cause. Proximate cause is a causal connection between the duty, the failure, and the resulting harm. For our purposes, the three primary duties that tend to get both dealers and equipment lessors into trouble are the duty to inspect, that is, the duty to fully and properly inspect every item that may be dangerous to customers, the duty to instruct, that is, to provide adequate instructions for the safe use of equipment to all of your customers, and thirdly, and most importantly for anyone who rents equipment, the duty to warn of foreseeable risks related to foreseeable uses and misuses of equipment by customers. Foreseeability is important not only because customers should be warned of such risks but also because customer misuse can be a valuable defense for dealers and lessors. Failure to satisfy any of these duties can generate negligence lawsuits. So how do you as a dealer limit or avoid these claims? Or push the liability off to someone else? First, make sure your employees satisfy all implied duties, particularly those having to do with inspections, instructions, and provision of warnings. Next, document your inspections in writing if possible. Document customers' receipts of instructions and warnings, again, in writing if possible. Warn customers in writing whenever possible to limit use of the equipment to the manufacturer's intended use. Again, depending on the jurisdiction there, particularly that jurisdiction's judicial precedence, misuse can be an immensely valuable defense. So by restricting the customer's use to the manufacturer's intended use, you by definition make any other use a misuse, at least in some jurisdictions. That can be hugely valuable for purposes of avoiding liability for equipment sellers and lessors. Next, include an indemnity provision. Remember, third parties can also sue you for negligence, tort claims, et cetera, which do not require privity of contract. So if your customer agrees to indemnify you, which is pay you, in your contract, you may be able to shift some or all of the liability for those third-party claims to your customer, or more importantly, your customer's insurer in many cases. Remember, you cannot waive liability for negligence in most cases, but you can shift liability to others. But that's not the end of the analysis. We still need to address the 800-pound gorilla, which is products liability. Products liability is a broad form of non-contract liability that permits plaintiffs to hold everyone up the chain of distribution and be liable for allegedly defective products. Take a look at the green bar over products liability on this slide. The average products liability award in 2017 was over $5 million. Now, that's the average on a single claim. I don't have to tell you what that means in terms of your potential exposure. Even if you're insured, you might not be for long if you get one or two of these claims. Looking a little more closely then, the primary issue with respect to products liability claims, at least in my view, is this. They extend from the customer and even bystanders all the way up the distribution chain to the manufacturer and designer of the equipment and make everyone in that chain, including dealers, potentially responsible for all associated damages. And just as importantly, that liability is often joint and several, meaning that each party up the chain is potentially 100% responsible for the entire claim. If, for example, the other parties are defunct, bankrupt, or perhaps protected by their contracts better than you are. So again, this is where a dealer can lose a lot, possibly everything, if something goes really wrong. It wasn't that way initially, by the way. As originally conceived, products liability only extended to the direct customer. But over time, that concept was, of course, like so many legal concepts, expanded to include everyone, from direct customers to other workers on job sites to even bystanders, as I mentioned. Now, almost anyone affected by an allegedly defective product can sue all the way up to the chain to the manufacturer and designer. So not only have the dollar amounts of damage to claims risen dramatically, but the number of potential plaintiffs who can sue you has expanded exponentially. So it comes in a variety of forms, negligence, breach of warranty, misrepresentation, all of which can impact dealers. The biggest threat by far is strict liability. That is, liability that doesn't require a plaintiff to even prove you actually did anything wrong. In those claims, plaintiffs only need to prove that a product you somehow dealt with in the chain of distribution was somehow defective and that the subject defect resulted in harm to the plaintiff. So again, because the potential liability is so great, it's absolutely critical that you protect yourselves. And how do you do that? Well, let's start with some basic contract provisions. Make certain your contract provisions with your customers, include at least these provisions. Acknowledgements that you're neither the manufacturer nor the designer of the equipment, that the buyer has received all applicable instructions, warranties, and warnings, that the buyer has completed a careful examination of the equipment, that the equipment is provided as is and without any warranties other than those provided by the manufacturer, an express waiver of all other express and implied warranties, limitations on damages, an indemnity defense and hold harmless agreement made by the buyer, and a waiver of incidental and consequential damages. And as we discussed before, wherever possible, a waiver of exemplary and punitive damages as well. I should note, these are far from all of the protections that should be considered, but they're at least a good jumping off point. Now let me talk about insurance for just a second. I'm sure all of you have various policies of liability and property damage insurance covering your equipment and operations. But if you don't have, or if you aren't sure if you have products liability, which is sometimes referred to as products completed operations coverage, you might want to consider it. Products liability insurance covers the manufacturer's or seller's liability for losses or injuries caused by a defect or a malfunction of a product, and in some cases, a defect in design and or a failure to warn of potential harm associated with uses or misuses. Those are called warning defects. You might want to check your existing GL policy before you go further, just to see if you already have it. Some do, but if you don't, at least see about getting a quote. I warn you, it can be expensive, and its terms can vary dramatically. It can also be a lifesaver if one of these claims pops up. Other forms of insurance I'm sure you're already aware of, but just for the sake of completeness. A commercial general liability policy covers other types of damage claims brought by customers and third parties. Inland marine or property damage insurance covers damage to your own equipment and other property. Hired auto covers damage to vehicles you lease to others. And workers' comp, important but often overlooked, covers employees, including when you require it of your customers, their employees who might be injured on the job, including when they use your equipment. So this can be important because in many states, workers' comp serves as an exclusive remedy, meaning it cuts off additional claims by injured employees if they receive workers' comp benefits. A few other things to be aware of with these policies, especially if you're renting any equipment. First, the insurance should be maintained only with insurers who maintain a financial strength rating of A minus or better, usually by A.M. Best or some other reputable financial ratings company. And it should otherwise be acceptable to you if for any reason the terms of the policy don't meet your requirements, you should have the right to review and reject. Next, with respect to commercial GL, or general liability and hired auto liability policies, list you as an additional insured for loss or damage rising out of your customer's use, maintenance, handling, or possession of the rented items. Again, this is particularly important if you're renting any of your equipment. And with respect to property damage, inland marine, and auto policies, they should always list you as the primary loss payee. You also want those policies to waive subrogation against you, which is the customer's insurer's right to step into the shoes of the customer and sue you. So waiving that right can be important for you. And finally, you want the customer's insurance to be primary, which is to say it pays first, and non-contributory, meaning that their insurer is not going to seek contribution, in quotes, from your insurer with respect to the payment of any claims. One of our objectives here being to avoid running up your insurance claims loss history, and possibly either increasing your premiums, or ultimately getting your insurance canceled. And of course, all of this yields one last very important question. What steps can you take now in order to protect yourselves and your businesses, both from current claims, and from those claims that may arise in the future? Well, aside from accumulating as much cash as possible, consider the following. Take a look at your contracts. You'd be shocked at how many business owners have no idea what's in them. They don't have time, obviously. They're busy running their businesses. But those contracts dictate the rules of the game. They are the playing field on which your business operates. So if those contracts don't adequately protect you in times like this, you may wind up learning the hard way. So the way to head that off is to get out in front of this, get them reviewed now, and if you need to make changes, make them before something like this comes up again. Unfortunately for many business owners who've come to me recently, their contracts didn't cover them anywhere nearly the way they should have in order to adequately protect them from the fallout generated by the coronavirus-driven shutdowns. Broadly speaking, you need to get all the necessary agreements from your customers up front before issues like pandemic-driven shutdowns occur. We'll talk more about the particulars on the next slide, but let's start with these. Eliminating or at least limiting cancellation rights to the extent possible. Next, cutting through limited liability shields and enabling yourself to recover against your customer's personal assets if he or she breaches your contract. Now note, this will be an option only with respect to some smaller customers. Larger contractors will never sign things like personal guarantees, so you won't be able to cut through. But you may be able to get corporate guarantees, guarantees by parent companies and or affiliates if you know that those parent companies or affiliates are better capitalized possibly or better insured than your direct customer. So this is something really worth considering and not just waving off because you think your customer's too big to sign a personal guarantee. Next, get prepayments and make them non-refundable in your contract. Use the words non-refundable. Same with deposits. Get them and make them non-refundable. Obviously, as we said before, get your customer's insurance whenever possible. Also, get insurance from service providers. You'd be surprised at how often we have clients who come to us and say they were injured or had some damage accrue as a result of some sort of negligence of a service provider, but they don't have an insurance policy to rely on. So always smart to get those up front. And then make use of GPS and telematic systems, not only for tracking of locations, but also for tracking use characteristics, some of which may be valuable if you later need to bring a claim against a customer for misuse. Then consider some basic legal issues and make certain that the documents you're having your customers or counterparty sign accomplish at least the following. Make it difficult for them to claim impossibility, impracticability, or frustration of purpose. Waive warranties, when you're the provider, that is. Try to eliminate warranty waivers when you're the recipient. Remember that certain UCC warranties will be implied even if you never said anything about a machine. I'm thinking of things like the implied warranties of merchantability and fitness for a particular purpose. Those have to be expressly waived in a contract and use those words in order to be effectively waived. Waive other UCC rights and remedies, including where possible, rights of rejection and rights of return. Include descriptions of defaults and remedies for those defaults in your contract. And be sure to include a right of repossession, unless, of course, you're in Louisiana where self-help is illegal. Address force, measure, and acts of God issues, of course. Now, in particular, because going forward, those will be in every contract. You need to be prepared for that up front. And finally, include some often overlooked but very important miscellaneous provisions. We often find that people read the word miscellaneous provisions as a header in a contract and stop reading. Don't stop. Miscellaneous provisions can include in critically important language, like integration, which effectively eliminates outside agreements and warranties, maybe statements on your website or in your advertising. Choice of law and jurisdiction and venue. Remembering that, as we said before, different laws can yield wildly different results. Choose your jurisdiction and your applicable law carefully. Electronic signatures are now the norm. Make sure your contract references and validates electronic signatures. Include the right to use telematics, recalling that now, in some states at least, using telematics without a customer's written consent is considered illegal stalking. And finally, a tax recovery provision. These also vary significantly from state to state. You wanna make sure that if taxes are assessed against you, you have a right of recovery against your customer or lessee. Now, when you think about how to accomplish these objectives and while considering issues like act of God and force majeure claims, you wanna also make sure to waive allowances, credits, setoffs, and counterclaims. Make the customer's obligations unconditional. Make deposits and prepayments non-refundable, as I said before. Waive allowances and prepayment reductions for non-use, including non-use resulting from an event of force majeure. Think about this in the context of renting your equipment. If your equipment is out on rent, is your customer going to come back to you at some point and say, I was not able to use that equipment for this period of time, therefore, I want a credit against the rent I would have otherwise had to pay you under my rental agreement? Separately, include specific default rights for your benefit, including the right to recover all amounts due unconditionally, as well as interest, attorney's fees, and collection costs, knowing that in some states, for example, Nebraska, you're almost never going to be able to get attorney's fees anyway, but in other states, most other states, you are likely to recover them. Waive the customer's UCC rights and remedies. Eliminate extraneous provisions. Be extremely careful of force majeure and acts of God provisions for all the reasons we've discussed, and include a broad indemnity, defense, and hold harmless provision, which includes now contamination, remembering that depending on the level of interest and or sophistication of the party on the other side of the table, indemnity provisions in particular are likely to be met with some resistance. If you're dealing with a larger customer, expect them to cross out or modify an indemnity provision. When you're dealing with other customers, it's not such a big issue. So you're generally better off to start with broad, strong indemnity, defense, and hold harmless provisions in the hopes that some, perhaps many, of them will be retained and appear in the final version of the contract to get signed, knowing that it's gonna be the cost of doing business with some others. So to sum it up, if I were to give everyone a short list of takeaways from this webinar, they would include, one, update your contracts as soon as possible. I assure you, the expense will be tiny compared with the money it saves you, especially if another virus makes its way around. Two, never sign others' contracts unless you contact us or your own attorney first. I guarantee their contracts will almost always be as slanted in their favor as yours should be in your favor. Three, get guarantees, personal and or corporate. Particularly when waves of customer bankruptcies result from economic downturns like the last one, these can save you hundreds of thousands of dollars in lost collections. Incidentally, be extremely careful of offering rental purchase options as they can create ownership interests in favor of your customers that bankruptcy trustees may then seize upon to grab your equipment when a customer goes bankrupt, sell that equipment off, and possibly or possibly not pay you, depending on whether you've timely filed the UCC-1 financing statement or have properly documented your rental purchase option in such a way that it does not create or cuts off that ownership interest. Require deposits for all the reasons I said before, and again, require prepayments wherever possible for all the same reasons and make all payments you receive expressly nonrefundable. Lastly, be sure to notify us if you encounter abusive practice from your customers, vendors, lenders, service providers, or others, especially at this time. We're seeing some practices that might be characterized as abusive or predatory, and you may have claims you don't even yet realize exist. Of course, it's always better to just be able to point to your contracts and win immediately, but even if it's too late for that, possibly you've signed some tiny print contract that is wildly unfair and permits a vendor or some other third party to engage in abusive or predatory practices, and you're left with no choice but to file a lawsuit, there are often a number of steps you can take to enhance your position and make the likelihood of prevailing in litigation significantly greater even now. So let us know now if you're encountering any of that type of behavior, and we may be able to provide you with some advice to get you out of it or limit the downside to you as a result. The more ammunition we accumulate, the more likely our clients are to win. As always, feel free to contact us if we can help with any of this. That concludes the formal portion of the webinar. I'd be happy to take any questions if you have them. Thanks, James. We'll give it maybe just a minute or two, see if we get any questions via that chat box, but thank you again for joining us this morning and for your presentation. We really appreciate it. My pleasure. Again, if questions don't necessarily come up in this webinar and they come to mind later, don't hesitate to contact us. You can call us at 866-582-2586 or email us at info at jameswhitelaw.com if questions come up later. James, looks like we do have one question. Pertaining to the Louisiana self-help law, it looks like it applies to automobiles. What about equipment? The theory definitely applies to automobiles, but according to the last conversation I had with my Louisiana counsel, and by the way, we maintain, I have relationships with lawyers in all 50 states, Canada and Puerto Rico, all provinces, so I routinely have these conversations with my local counsel, and per his last recommendation, no, the Louisiana self-help law applies to restrict repossessions across all types of personal property, not just automobiles. Okay, thank you. We've got another question. James, we have a rental contract that you prepared about two years ago. Will all these protections already be in that? Fortunately, John, yes. As a matter of fact, we went through in great detail for the contracts we've provided over the last several years, and in every case that I've seen thus far, though I haven't reviewed yours specifically, in every case that I have checked, all of these specific issues, including contamination, yes, every one of them has already been in there, just because we were engaging maybe in a little bit of lawyer paranoia early on. We're glad we did it now. All right, well, if we don't have any other questions, like James said, if you do have a question, you guys can get in touch with him. Otherwise, James, thank you again for your time this morning, and thank you to all of you for attending. Thanks, my pleasure. Take care, bye-bye. Bye-bye.

James Waite

equipment dealers

manufacturer relationships

liabilities

contracts

insurance coverage

breach of contract claims

legal counsel