Hello! I'm Terry Dortch from Automotive Risk Management Partners, and today, I'm going to delve into the intricate world of contracts in the automotive business. We'll dive into the common challenges dealership proprietors face, and how you can structure vendor and customer deals more efficiently.
Automotive Contracts
Let me paint a picture; with years of experience in this business, I've found that car dealerships often harbor significant attention to detail in structuring their deals. From the buyer's order detailing all the add-ons, to maintenance services to be performed - everything is meticulously documented.
To elaborate, the following elements are often encapsulated in the buying process:
- Buyer's Order: a document outlining add-ons and services for the vehicle.
- Retail Installment Sales Contract: most buyers finance their vehicles, making this necessary.
- Work Order (WIO): an additional document outlining post-purchase add-ons and services.
Most dealerships exercise extreme attention to these paper works ensuring that every aspect of the deal is thoroughly documented. However, this meticulous approach doesn't seem to extend when dealing with vendors. With that, I emphasize how important it is to extend the same level of diligence to vendor contracts.
Being meticulous in documenting every aspect of a deal with a customer ensures transparency and agreement on all terms. The same level of exactitude should be extended when crafting vendor contracts."
Reading the Fine Print in Vendor Contracts
Recently, in one of my meetings with a sizable automotive group, we studied a vendor contract whose purpose was to look after certain compliance issues. The contract was fairly short, most of it merely serving as a signature page with details of the dealership and the name of the service-providing company.
However, delving into the body of the contract revealed alarming vagueness. While it claimed to provide ‘compliance remedies,’ there was no clear declaration of what precisely those remedies were.
Importance of Detailed Vendor Contracts
Vendor contracts should be as comprehensive as possible. For instance, our contract at Automotive Risk Management Partners spans four pages and provides a clear and thorough capture of our processes.
I. We explicitly define our service offerings.
II. Explicitly detail our services involving dealership visits.
III. Comprehensive details of our compliance-related processes.
Rejecting the notion of a “hold harmless” clause, we do not avoid our liability. This transparency contrasts with many dealerships that mishandle vendor contracts, practicing diligence with customer contracts but not extending the same to third party vendors.
Identifying and Maintaining Contractual Obligations
Avoid rushing through signing contracts and scrutinize whether what you signed up for aligns with the offerings. For instance, a dealer hadn't seen their contracted vendor for six months after signing a contract that vaguely stated 'regular visits.' 'Regular,' then, becomes open to interpretation when not explicitly defined.
'Case in point’ here is the significance of knowing ‘what exactly it is that you’re getting'. When you operate with Automotive Risk Management Partners, we guarantee transparency. We spell out our obligations in our contract and intend to guide you through anything with compliance that you may face.
Got Questions? Reach Out!
For questions or more information, please don’t hesitate to reach out to us. Whether via a call or through our website, we're always ready to assist.
Thanks for reading, and take care!
Terry Dorch, Automotive Risk Management Partners.