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June 2016 Archives

NY Company's Contract Terms Draw Fire from Connecticut AG

In Connecticut, businesses may have their contracts "undone" and be forced to pay restitution if the contract contains unfair or deceptive terms and provisions. In a recent settlement, Ferrandino & Son, Inc. (F&S), a New York business, agreed to pay damages based on alleged unfair trade practices in a snow removal contract with Connecticut subcontractors. The contract laid out a payment arrangement involving a flat rate for snow removal services and a tiered bonus structure for snow removal amounts above a 30-year "average annual snowfall." The contract signed by each subcontractor included an exhibit listing the snowfall averages that would be used to calculate bonuses, however the express language of the contract required that bonuses be calculated based on 30-year "historic snowfall averages." According to the CT Attorney General (AG)'s office, the actual benchmark used for calculating the bonus structure "was not based on any industry standard or verifiable mathematical calculations of site specific historic snowfall data, and thus was not a valid 30 year snowfall average for that site." The snowfall averages listed in the contract were much higher than actual historic snowfall averages, and as a result, even when snowfall was higher than average, the subcontractors received lower compensation than if historic data had been used to calculate the bonuses.

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