What Is A Towing Contract?
The purpose of towing contracts is to give certain and definite rules governing the performance of such towing. The commercial wrecker industry came into existence some time ago as the automobile was developed and gained popularity. At that point, there arose the need for many who traveled in the public roads to be able to call a commercial wrecker to pull their vehicle from a ditch or other perilous location or to tow the vehicle to a repair shop . It has evolved into something much more significant than this, however. We are forced to avail ourselves of commercial wreckers because of broken parts, car accidents and other things for which we require the services of commercial wreckers. The basic elements of a towing contract are reasonable charges, notice prior to the performance of services and the payment of the price or the sum owed for the service.
Important Elements Of A Towing Contract
In any industry, having a clear understanding of the terms and conditions of a contract is imperative for both parties involved. Towtruck companies typically enter contracts with businesses that will regularly utilize their services, such as shopping centers, residential living spaces, or parking lots. Although these contracts can vary in length and scope, according to the needs of each party, there are a few key components that these contracts should always contain:
Scope of Services: While this may seem obvious, it is clearly important to include very specific information when discussing the scope of services. For example, does the client expect the towtruck company to regularly patrol their entire facility, or only certain areas? Should the company plan to alert clients prior to towing a vehicle, or does the client authorize them to do so at their discretion? All of these details should be clearly articulated within the contract.
Pricing and Payment Terms: In addition to specifying exactly how many vehicles the client expects to be removed, the payment system should be understood clearly by both parties prior to signing the contract. Will the company need to submit an invoice on a weekly, monthly, or quarterly basis? How quickly should clients expect to be paid once they have submitted their invoice for payment? Are there any additional fees or surcharges that the client should expect to be paying in addition to the base rate?
Contract Term: Many contracts are entered into on an open-ended basis, meaning neither party has to continually sign extensions to continue working together. However, it is important that the duration of the contract is specifically laid out in the documents signed by both parties. This eliminates any serious misunderstanding as to whether or not the client is allowed to seek service from another company prior to the expiration of the contract, for example.
Termination Clause: Should the client or the towtruck company encounter issues during the contract, it is imperative that they have a clearly written way to exit the deal. This should involve as much detail as possible, including what exactly constitutes a breach of contract and how to proceed in such an event.
While these are not the only components that are critical to certain towing contracts, they are typically found in most agreements signed between a client and towing company.
Different Types Of Towing Contracts
There are several types of towing contracts available, tailored to the specific needs of your business. For example, a short-term agreement may be what you are looking for as the "trial run" you need to establish a strong relationship with a tow company. Alternatively, you may wish to enter into a long-term, multi-year contract that provides you with guaranteed rates, but carries some risk in terms of potential future service issues.
Some businesses and individuals provide a wide range of services, including emergency towing, and find it advantageous to have an established relationship with a professional towing provider that can meet all their needs. Still other people need on-call and emergency towing services as needed; for them, a non-exclusive arrangement may be the most cost-effective option.
In negotiating your towing contract terms, keep in mind:
Short-term agreements
Short-term agreements are typically initiated and completed within less than one year, with minimal risk to either party. This option is best for someone looking to try out a new relationship before expanding the terms of their agreement.
Long-term agreements
By committing to a long-term agreement, a business can secure prices and a service commitment for a predetermined period of time. However, if a business chooses to enter into a multi-year, exclusive contract at a lower price, it may create unnecessary risk if the service is subpar or if the contract terms prove to be unprofitable.
Non-exclusive agreements
Some businesses and individuals in need of occasional towing services may wish to enter into a non-exclusive arrangement that allows them to call upon a provider only when needed. This can be a good option for people who only occasionally need a vehicle towed.
Exclusive agreements
In certain cases, it can be advantageous to enter into an exclusive agreement with a service provider. By committing to this type of agreement, the parties can ensure they are always ready and prepared to work with one another, delivering top-notch service.
How To Write A Towing Contract
When drafting a towing contract, both the tow truck company and the property owner should consider the following:
• Written agreement. Virginia law does not require towing contracts to be in writing, but a written towing contract is strongly recommended. This permits the parties to agree on all material issues and will also help avoid costly misunderstandings down the road. Let’s say a court finds the a towing contract was too vague to enforce. If that happens, the lawful enforceability of a towing contract can be very different depending on whether or not that contract had been reduced to writing.
• Who’s Contract? A property owner must ensure that it will be the one using the services of the towing company. If the services to be rendered will be for a third party (such as the property manager), it may need to be agreed to in writing, such as an addendum or a separate agreement.
• Rental property? If a property owner intends to have a towing agreement with a property management company, they should be aware that Virginia law is very protective of tenant rights, such as imposing many requirements on landlords when they enter into a vehicle towing agreement.
• Duration. Clearly specify who will determine unusual circumstances that can result in a termination of the towing contract. A practical approach might be to permit termination with no more than 30 days’ written notice from either party.
• Pricing. Address what will happen if there are changes in the law. What if a new law is passed that requires the towing company to charge more, or provide a different service. Can a Court enforce the new pricing schedule. Can the property owner terminate the contract?
• Pre-printed forms: If the towing company uses pre-printed forms, it must comply with Virginia law, including at least the following:
o The property owner must sign the agreement, not the towing company.
o The contract must state the type of warnings to be provided.
o The towing company can’t have a waiver for liability.
• Sub-contractors. Address whether subcontractors may be used; and whether that will require prior approval.
• Amendments. Specify how amendments can be made, and who must sign. If any part of the towing agreement becomes invalidated by a law or regulation, the remaining parts can remain effective and enforceable.
• Governing law. Address whether Virginia law applies and any other jurisdiction where matters under the towing agreement are likely to be heard
• Mediation. A mediation clause can be a helpful approach to resolve disagreements before more formal litigation is pursued. It can also favor the party who has the burden to prove its case in court.
• Other considerations – Property owners must also comply with any local towing ordinances (including signage requirements).
• Negotiation and tools. Negotiation of the towing contract should not be seen as a nuisance, but an opportunity to modify the contract to better secure the mutual interests of the property owner and the towing company. It may also be best if the parties create a checklist of the conditions that will help enforce a towing contract and strengthen the relationship between the parties.
Legal Issues In A Towing Contract
Legal considerations play a crucial role in the formulation and execution of towing contracts. These contracts must adhere to a mosaic of laws and regulations, ranging from state statutes governing lien rights and storage fees to federal laws regarding commerce and commerce-related statutes. A comprehensive understanding of the legal landscape surrounding towing contracts is essential for businesses offering towing services as well as for consumers who find themselves on the receiving end of such services.
One of the first legal hurdles in drafting a towing contract is ensuring that it aligns with applicable local and state regulations. Many states and some municipalities impose specific requirements on towing service providers, such as licensing, bonding, and insurance. Failing to comply with these regulations can result in the invalidation of the towing contract. More significantly, a towing company that fails to obtain a license or does not post the required bonds may expose itself to significant risks. Such companies will find that the protections and remedies afforded by the law may be unavailable to them.
Risk management also involves scrutinizing the contract for any clauses that may limit liabilities or impose unfair burdens on consumers . For example, many towing contracts contain large liability waivers or exclusions, and consumers are often required to sign these as a condition precedent to obtaining a service. The dangers of such waivers are not immediately apparent, as most consumers regard a towing service as a necessity when they have no alternatives. However, it is important to understand that making such a waiver a condition of receiving a service constitutes an illegal restraint of trade, as consumers are unable to choose from a competitive market where only some companies offer waivers.
Dispute resolution mechanisms for conflicts arising under a towing contract should also be carefully vetted. While agreeing to binding arbitration as a means of settling disputes is permissible, it is important to note that, unless it requires a neutral arbitrator to bring a situation within the protections afforded to consumers by law, it is journalistic malpractice to call it consumer protection law.
When considering whether to enforce a towing contract, both parties should also be mindful of the provisions contained in the contract governing its interpretation and enforcement. Some provisions are written in such an egregious manner that the courts are legally and morally obligated to strike them down as violations of public policy.
Common Towing Contracts Mistakes
It is important to avoid common traps in order to avoid unanticipated problems at the end of the contractual relationship. Some of these common mistakes are as follows:
- A poorly drafted contract, in which rights and responsibilities are not well defined.
- Failure to asses the true value of the services provided – towing rates are regulated by various provincial statutes and regulations, and imposing a tow rate that is contrary to these laws will render the contract void and unenforceable.
- Failure to ensure that vehicles are properly ticketed and/or documenting the state of the vehicle before the vehicle is towed – photographic evidence can be very valuable in ascertaining responsibility.
- Failing to adequately define the term "Abandoned Vehicle" or "Impounded Vehicle" in the contract.
- Leaving out how a "Abandoned Vehicle" or "Impounded Vehicle" is to be disposed of or what happens to the proceeds, etc.
The Importance Of Towing Contracts In Managing A Fleet
For businesses that rely on vehicle fleets, whether for deliveries, transport services, or even employee commuting, the management of these vehicles is crucial to overall operations. Managing a fleet involves not just the routine oversight of vehicles, but also having a strategy in place for emergencies, accidents, or unexpected breakdowns. This is where towing contracts come into play.
A commercial towing company can be a trusted resource for businesses of any size. Many have fleet management teams solely dedicated to working with companies to manage their vehicles at all times. When a company needs to call for a tow, the conditions under which they need service are not simply done on an ad hoc basis. The contract details a list of agreed-upon rates, available services, time tables, and procedures for selecting a towing company .
Fleet management services can be beneficial to companies in a variety of industries, from construction to retail to delivery services. Towing companies can provide roadside assistance, 24/7 emergency services, and recovery of lost or stolen vehicles. Company employees know when they are operating within their geographic service area to call for the same professional service provider that knows their routes and is able to efficiently manage their equipment quickly and effectively.
For some companies, having a contract means that the terms may be renegotiated on an annual basis or longer. Other businesses may work with a single provider for decades at a time. Either way, the relationship between a towing company and a fleet management team is more than simple consumer research. It generally involves establishing a cost-effective strategy for long term savings based on a thorough understanding of all parties’ needs.
