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Case 3 - Waste Management Canada

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Contract Writer:  Waste Management of Canada

Original agreement as per contract front page:  Waste bin to be left on clients premises for 36 months

Result due to contract wording Client kept services for 10 years. Rollover clause meant contract was rolled over for another 36 months at the expiration of each term. Client unable to cancel contract without exit fees and charges due to the latest rollover being only 1 year into the term.

•  The initial term "Term") of this agreement is thirty-six (36) months from the start (or "open") date of date specified in this agreement or (ii) the currently specified date of expiry of the waste collection service contract, whichever is later. This agreement shall be automatically renewed for an additional term of thirty-six (36) months each unless either party gives the other party written notice of termination at least ninety (90) days, but not more than one hundred eighty (180) days, prior to the then-existing term.

• Another automatic rollover clasue. This type of clause seems to be standard issue for waste collection companies. Coupled with the narrow 90 day window for cancellation, this clause almost assures Waste Management of continued business or the right to impose exit fees.

• 1. ... The Customer grants to Waste Management of Canada Corporation ("the "Company") the exclusive right, and the company shall furnish equipment and services, to collect and dispose of ...
• 4. ... The Company may increase the charges to account for; any increase in disposal costs or change in location of disposal facilities, fuel or transportation costs ... increased costs due to uncontrollable circumstances, including, without limitation ... The Company will provide the customer thirty (30) days written notice of increases in charges for reasons other than as provided above ("Other Increases"). Any such Other Increases require the consent of the customer.
• 9. RIGHT OF FIRST REFUSAL. The customer grants the Company a right of first refusal to match any offer relating to services sililar to those provided hereunder which the Customer receives (or intends to make) from or to any person intended to be effective on or after termination of this Agreement for any reason. The Customer shall give the Company prompt written notice of any such offer (including a copy) and at least 15 days to respond to it. The Company may also, at any time either before or after the Customer's receipt of a copy of any offer, re-negotiate or extend the terms of this Agreement with the Customer, including adjusting the rates payable under this Agreement. Any modifications or amendments to this Agreement, including any adjustments to the rates payable by the Customer under this Agreement, will take effect only upon the expiry of the then current Term.

• 1. You are granting them the exclusive right to collect your waste. OK, so that's fair enough if your circumstances don't change, but let's suppose the amount of waste you produce increases. Well this clause coupled with part of Clause 4, allowing Waste Management to increase your charges to account for ... any change in the composition of the Waste Materials or increases in the estimated average weight ... means that you could be slugged for a much higher rate should your circumstances change - and there's nothing you can do about it because you are giving them exclusivity.
• 4. "The Company may increase the charges to account for" does not necessarily mean that they will increase the charge by the amount that the costs increase. All they have to do is to increase their costs "to account for" the increased costs. Suppose their cost of fuel rises by 5%, then to "account for this" they may increase their price to you by 10%, 15%, 20% or whatever figure they like. Because the "increase reason" is listed in the contract you don't even have to agree to the increase, and the increase can take effect immediately. By the way, there aren't too many reasons for an increase that are not covered by this clause because they have included the phrase "due to uncontrollable circumstances, including, without limitation, ...". The only way you can get out of the contract due to them increasing prices, is if a) the price increase is not "to account for" their increased costs for any reason whatsoever and b) subject to a) if they won't restore the original price if you do object. So long as they have an increased cost of some type - any type - the cost of A4 paper used in the office maybe - they can increase your prices "to account for this" and you can't do a thing about it.
• 9. With the "Right of First Refusal" you can't even set up a contract with a new provider before your contract with Waste Management expires. As soon as you get a quote from another provider you have to let Waste Management know about it, give them a copy, and allow them to "renegotiate" their contract with you. But there's more... They don't even have to re-negotiate with you because their clause says "re-negotiate or extend the terms of this Agreement". So once you furnish them with the new quotation, they can simply extend the terms and they don't even have to renegotiate with you. But wait, there's even more ... "... including adjusting the rates payable under this Agreement." Have you noticed that they don't even say that they have to match or better the other providers quote? Read in plain English - If you get a quote from another service provider, you have to give a copy to Waste Management, whereby they may extend the terms of your current contract and may adjust the rate you pay". Hopefully you are reading this before you have signed one of these contracts not afterwards.