Q: We need a new phone system for our agency. I have received a proposal from a national vendor that is so complicated I don't really understand it. It is filled with jargon such as "DIDs," "MRCs," "FSLC," "LNP," "PRI," "Expanded Service," "Seats," etc. When I asked the sales rep to explain these terms, I could not follow his vague answers that prompted more jargon. When I asked whether the system will do certain things, the rep answered, "of course," but he has been unable to show me where it says so in the contract. When I asked whether I am protected against price increases, the answer was "no, that is impossible." I am at a loss, and time is running out. What can I do to protect myself?
A: There are four things you can do to protect yourself: hire a phone-system consultant, ask for references from satisfied travel agencies, obtain competing proposals and add certain protective clauses to the contract.
The most important protective clause is a free out if you are not satisfied after a fixed period of time, such as three, six or 12 months. If you have a right to terminate, you will have at least some leverage to get the vendor to install the system on time and to implement the features that you need and expect, even if the contract does not expressly provide for those features.
Like almost all technology contracts, phone-system contracts do not promise all the features in the vendor's proposal or marketing material. So another important clause is one that adds those features as an exhibit or addendum to the contract, along with a warranty that the system performs and will continue to perform those functions.
By incorporating the features that are written in plain language in the vendor's sales material, you largely overcome the problem presented by the incomprehensible jargon of the contract. It matters less what all the acronyms mean if the contract promises what you actually need in language you can understand.
Another key clause is protection against price increases. In a typical phone contract, the vendor can increase prices in several different ways, including some mysterious ones such as tariffs filed with various levels of government. Despite what your vendor may tell you, there is no law against including a clause stating that the vendor will not increase the prices in your contract.
A related clause is protection against charges for services that are not listed in the contract. As with GDS contracts, the typical agency will need more services from the vendor than what the contract price covers, and there will be charges for such services. Ideally, you should get an addendum to the contract listing all such optional services and their charges.
If you move your office, the vendor can probably take advantage of you by charging exorbitantly, so try to get a clause waiving or reducing charges for an office move. If you sell your agency or close your business, get a clause allowing early termination on payment of a reasonable fee.
Finally, be wary of automatic renewal clauses. Most such clauses allow the vendor to increase prices during an renewal period, so try either to eliminate the automatic renewal or to prohibit price increases during any renewal term.
Mark Pestronk is a Washington-based lawyer specializing in travel law. To submit a question for Legal Briefs, email him at [email protected].