This Illusory Clause in Most AV Contracts Is Completely Unenforceable

AV contractors should take note of discrepancies between equipment lists and the narrative listed in AV service contracts.

Josh Srago Leave a Comment
This Illusory Clause in Most AV Contracts Is Completely Unenforceable

That infamous phrase that every AV contractor has encountered in their careers at least once while working a design-bid-build project: “AV contractor is responsible for a complete system.”  But those building AV service contracts need to be aware of the fact that this is entirely unenforceable.

This kind of vague, catch-all type phrase is what the legal community calls an illusory clause. It’s specifically the point that it is vague and undefined that makes it completely unenforceable.

The “Illusory Clauses” AV Contractors Face

Let’s say that a consultant produces a specification that includes the above clause but then provides a specification that leaves out some minor rack accessories (fans, power distribution, etc.).

Most contractors would look at this as an instance of good will where they can establish themselves as someone that goes above and beyond in order to get recurring opportunities from the consultant.

These are low cost items that can easily be built into the cost of the job that won’t hurt the bottom line that much. We reason ourselves into the benefit of just letting it slide for the future benefits of possible business.

While protecting our business relationships is vital, from a legal perspective, this might be a mistake.

Let’s say that the consultant was under a time crunch and not only left out the rack accessories, but also major components like a pan-tilt-zoom camera, a USB bridge, and a touch panel interface in the equipment list.

Yes, the narrative descriptions of the room state that this equipment will be necessary for the defined functionality of the room, but the consultant failed to update the equipment list to include these items.

Attempting to use the nondescript clause in this instance would be entirely unreasonable.

Section 274116

What we often forget is that section 274116 operates as a contract document. It is the operative portion of the contract that defines what the work is, what will be used to execute the work, and the quality requirements the work must meet.

Failure to include something in the specification means that it is not actually part of AV service contracts. This is what brings us back to the illusory clause. An illusory clause is one that appears to be binding but is not so.

Using the statement, “Contractor is responsible for providing a complete system,”  carries with it no definite terms of what a “complete” system actually entails.

  • Who is to be the judge of what is complete or not – particularly when the person that created the documents has a vested interest in ensuring that any mistakes or missing terms were their responsibility?
  • What is complete when the narrative description of what the system is per room is does not match the equipment list?
  • Is it complete according to the defined quantities and devices or is it complete based on the narrative description?

This long-used catch all phrase that has been relied on by some consultants for decades as a way to cover themselves in the event that they missed something in the specification is not enforceable.

Contract documents require that the terms be disclosed, defined, and understood by both parties. “Complete” is an undefined term that’s subjective to the party interpreting it, which therefore makes it unenforceable in your AV service contracts.

So the next time that you see this clause, be sure to take note of anything that may be missing from the equipment list or any discrepancy between the equipment list and the narrative and fill out your requests for information to ensure that the requirements of the project are clearly defined.

About the Author

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Josh Srago, an award winning AV professional with experience as a consultant, integrator, manufacturer, and end user, is currently attending law school at Santa Clara University with plans to return to the audiovisual industry and aid with the quickly changing legal and regulatory landscape of technology. Any article written by Josh that includes statutory or legal analysis does not constitute legal advice.

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Comments

  • JEFF GRANDELL says:

    You are absolutely correct to watch out for this. We experienced this identical situation with an international franchise when designing and installing for their flagship QSR store in a mall. Part of the design included the content on the menus. Although the installation was complete and operating for several months, payment was delayed because the CEO would travel around the US and see other content on QSR menus. He would return and have us modify the content under the same “completion clause” . He would stipulate the install was not “complete” until he was happy with the content. Which of course was ludicrous given the designs were being created by his marketing team. We were simply managing it for him. After all, how do contractually determine when someone is “happy”. Filed a mechanics lien against the equipment and the mall. Payment was made pretty quickly after involving the mall property management.

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