Once a bad contract is entered into, there are not many ways to get out of it. Florida laws sees most commercial contracts as arms length transactions and consider both parties to the contract "big boys" and is not sympathetic if one party takes advantage of the other in the contract terms. The fact that the written contract words end up different than what the parties said to each other will usually not get you out of the terms of the badly written contract. You must read the contract and make sure it conforms to what you believe the contract to be by what was said.
There are a few legal concepts that may get you out a bad contract. However, they are very limited and include: contract under duress, illegal contract, fraud in the inducement, negligent misrepresentation and no meeting of the minds.
Because Florida is an "at will" contract state, unless a contract specifically requires "cause" to terminate a contract, Florida law will not require cause or nonperformance be shown in order to terminate the contract if applicable "no cause" language is included in the contract to permit termination. Showing cause or non-performance is subjective and the contract language will usually permit the alleged non-performing party the "right to cure". Therefore, it can be very difficult to get out of a bad contract if a non-performing party is minimally conforming or cures after a breach.
To avoid the "have to show cause" pitfall, contracts between community associations and service providers should provide that the contract can be terminated by either party "with or without cause" upon proper written notice (usually 30 days). This way, when an association becomes unhappy with the providers service, it can easily and quickly terminate same without having to give any reason and then quickly hire a new provider.
Another problem with having to give reasons for termination under a "for cause" contract is that unnecessary negative ill will can develop between the parties which ill will can easily escalate to allegations and charges of libel, slander, discrimination, etc. With a "with or without cause" contract, no bad reasons for termination need to be provide, nor should be provided, to the terminated party. This way the ill will, allegations and lawsuits can be avoided.
As a final technical point to remember to avoid charges or improper contracting conduct, certain contracts in community associations require bidding to occur before contracting while other types do not.
For condominium and cooperative associations, Sections 718.3026 and 719.3026 respectively provide that "(1) All contracts as further described herein or any contract that is not to be fully performed within 1 year after the making thereof, for the purchase, lease, or renting of materials or equipment to be used by the association in accomplishing its purposes under this chapter, and all contracts for the provision of services, shall be in writing. If a contract for the purchase, lease, or renting of materials or equipment, or for the provision of services, requires payment by the association on behalf of any condominium operated by the association in the aggregate that exceeds 5 percent of the total annual budget of the association, including reserves, the association shall obtain competitive bids for the materials, equipment, or services. Nothing contained herein shall be construed to require the association to accept the lowest bid. (2)(a)1. Notwithstanding the foregoing, contracts with employees of the association, and contracts for attorney, accountant, architect, community association manager, timeshare management firm, engineering, and landscape architect services are not subject to the provisions of this section."
As for homeowners' associations, Section 720.3055 contains very similar language to the above quoted. However, the percentage requiring competitive bids is over ten (10) percent of the annual budget, including reserves and there are some exceptions to requiring competitive bids for contracts executed before Oct. 1, 2004.
Remember to get competitive bids (at least two) prior to contracting for certain services or materials. To avoid getting stuck in a bad contract or being challenged for failure to obtain competitive bids, it's always good to run a proposed community association service contract by a competent attorney prior to the president binding the association by signing same.
Rob Samouce, a principal attorney in the Naples law firm of Samouce, Murrell, & Gal, P.A. concentrates his practice in the areas of community associations including condominium, cooperative and homeowners' associations, real estate transactions and closings, general business law, estate planning, construction defect litigation and general civil litigation. This column is not based on specific legal advice to anyone and is based on principles subject to change from time to time. Those persons interested in specific legal advice on topics discussed in this column should consult competent legal counsel.