Storage Contract Agreement Definition
Storage Contract Agreement is defined as an agreement that is made between or among the parties whereby one party, a storage owner or developer, agrees to take delivery from a supplier of products or material into storage, and/or sell or distribute all or part of such products or material from storage, in each case subjected to the terms and conditions of the agreement. The Storage Contract Agreement may be structured as a (a) "Throughput Agreement," in which the storage owner/developer is paid by a product supplier or distribution for handling the storage and loading and unloading of the product, or (b) "Charge-In/Charge-Out Agreement" in which the user of the storage facility pays the facility owner reasonable charges to store product at the facility and arrange for third-party transportation of the storage unit to location of delivery .
"Agreement" means this Storage Contract Agreement and the various Schedules and Exhibits attached to or referenced herein, as the same may be amended from time to time.
"Business Day" means any day other than Saturday, Sunday and any other day on which banks are generally not open for business in the City of Houston, Texas.
"Storage Unit" means the storage unit(s)/facility identified on the applicable Schedule D.
Elements of a Storage Contract
Key Components of Storage Contract Agreements
The fundamental components of a storage contract agreement typically include the terms of storage, the responsibilities of each of the parties, and any considerations regarding payment, access, and termination.
Terms of storage will include the time period for which the construction equipment is to be held at the storage facility. The contract will need to specify when the rental period begins and ends. For example, if the equipment will be stored indefinitely, a schedule for its periodic evaluation or consideration for renewal may be required. Alternatively, a short-term contract may require a defined beginning date and termination date with a specific opportunity for extension.
The responsibility of the parties will be clearly set forth in any storage contract agreement. This section of the contract will generally include the responsibilities of the Owner, as well as the Lessor or storage company. For example, the Owner may be responsible for providing all maintenance and upkeep of the construction equipment while it is in storage. Under this scenario, the Lessor would be required to use reasonable care in the storage of the equipment. Many times the Owner and Lessor agree to certain maintenance requirements that are to be performed on the equipment while in storage. For instance, if the Owner has an anticipated date of use, certain equipment checks or inspections may be performed. As part of this process, there may be a periodic evaluation of the need for execution of a compulsory maintenance contract. Lessor’s responsibility may also include security monitoring of the equipment while it is in storage.
Finally, any storage contract agreement will discuss the timing and amount of payment, the rights to access the equipment after a certain time period, and the circumstances under which the contract may be terminated. In most cases, the Owner is required to provide a certain number of days of notice to the Lessor prior to the end of the agreed upon term to dilate of any renewal period. The contract is likely to contain any penalties or costs associated with early termination. A storage contract may also set out the rights of the Lessor to remove equipment should the Owner fail to make the necessary payments, or be unable to contact the Owner for an extended period. The Lessor will likely be required to comply with a notice provision or minimum grace period before terminating storage.
Storage Contract Legal Issues
When it comes to creating a storage contract agreement, there are various legal considerations that one should keep in mind to avoid unnecessary issues down the line. By knowing what things you should include in your contract, you may save yourself from a headache later. For instance, you need to clearly state your liability as the storage provider in the contract agreement, restricting yourself from liability for acts not committed by your employees or subcontractors. You should also clearly define exactly what you mean by gross negligence, thereby limiting your liability in your agreement. Liability for loss or damage is generally limited by Section 804. Any liability beyond what is stated in the contract is excluded. It is best practice to clearly state what value of property being stored the contract applies to, and what coverage options you provide. For instance, option 1 covers stored property valued at $500, and option 2 covers stored property valued at $5,000. An additional cost may cover an amount more than the agreed amount of insurance and the premium to be returned if no accident occurs during the term of the contract with the storage provider. For insurance requirements, you require that the client carry property insurance on the stored property. This will help cover any loss or damages of property being stored. However, you should state that you are not an insurer and do not provide coverage for the renter’s goods in any capacity. Be sure to also state that you shall not be responsible for the destruction of property held in the rented space by fire, water, or any other act deliberately by you or your agents. Be sure to be clear on the coverage amounts you provide.
Another thing you should include is compliance with local ordinances. You must comply with all the laws and ordinances of the city, county, state or province you are located in. Should there be an amendment to any of these laws or ordinances, the agreement will be changed to reflect such requirements. Last, consider what methods are available for dispute resolution. Will you go through the courts to settle a dispute, or will you go through arbitration and settlement negotiations first to try to settle the issue outside of court? You could also list the venue where any court proceedings need to happen, including what state.
Types of Storage Contract Agreements
There are several common types of storage contract agreements that are used in commercial practices, and each offers different features and benefits:
Self-storage agreements: self-storage is perhaps the best known type of this agreement. It generally allows a person, company or entity to rent a portion of a larger facility of storage units and provides cabined access to that portion only. The landlord of the facility will often set out specific times when access to the facility can occur and may well restrict access to non-business hours. Although self-storers in these settings will have their own lock and key to their unit, they do not have control over access to the larger facility. This can be divided further into indoor and outdoor self-storage agreements. Indoor storage is essentially a self-storage environment in an indoor setting, typically with temperature-controlled conditions. Outdoor self-storage often refers to the familiar rows of double doors, most commonly found in suburban and rural areas. Although access to the storage units themselves is free from interference, the overall premises are often subject to supervision for insurance purposes. Hence, this arrangement is often only suitable for those who have smaller, more readily portable items which they wish to store.
Warehousing contracts: a warehousing contract is generally applicable to a much larger scale. Under a warehousing contract, the duties of the parties are established under provincial or territorial sales goods legislation or through contract law. Under a warehousing contract, the owner of the goods will pay for the use of the space, which is typically allocated within a bigger facility, but in more secure conditions than might be the case with self-storage. The owner usually has better access to the warehouse, paying for additional time as required. These arrangements also often envision the owner receiving some sort of return at the end of the term. Warehousing contracts are typically much more flexible than self-storage contracts.
Cold storage agreements: under a cold storage agreement, the items being stored must be capable of being stored in a temperature-controlled environment, and often the delivery of these items will have to be performed continually to maintain the necessary temperature to ensure the safe storage of the materials. Cold storage agreements are generally entered into by suppliers of food products, pharmaceuticals, and other time- and temperature-sensitive goods. The suppliers are generally aware of the nuances of the temperature requirements and will supervise the process. In some cases, an employee may be retained to supervise the establishment on a continuous basis.
In addition to these, other storage agreements include third-party storage agreements and online storage agreements. Storage agreements are generally unenforceable against third parties, and unless they are registered in the land registry, they do not affect title or any purchaser without notice of the arrangement. Storage agreements that are used to create a security interest in personal property (also known as an encumbrance) may require registration in a public register depending on the particulars of the transaction and the items being covered. On the same note, where the agreement concerns the storage of machinery, vehicles or other items covered under the legislation, there may be additional requirements under the provincial or territorial motor vehicle legislation.
Common Mistakes in Storage Agreements
A number of issues can plague storage contract agreements. Sometimes these issues are internal, created by one or both parties’ failure to understand the agreement’s terms. Oftentimes, parties may neglect to consider certain clauses as pertinent, assuming others, or simply fail to carry out their obligations under the contract. It is important for any party entering into a storage contract agreement to consider the following:
Storage contract agreements generally contain an expiration date, and this can be a big pitfall for parties that have failed to review contracted terms. Some agreements automatically renew at expiration. Most will auto-renew in the event of a default by one of the parties. Any parties that continue to use a storage facility after the expiration of a contract may expose themselves to liability.
If a party has not received notice of the default, was sent a confused or unclear notice, or feels the notice was sent to the wrong address, they may not know to correct the problem before it leads to a contract termination .
Any party that has had to sue a storage facility to enforce a contract may have been horrified to see expressly included in the contract a mandatory arbitration clause, preventing them from going to court to pursue legal relief.
Parties may overlook mechanics of a contract, such as renewal, default, and termination clauses. These are generally found in the middle or end of a contract. The problem with overlooking these clauses is that they can drastically alter a party’s obligations. Failure to properly enforce a contract’s terms can lead to liability or termination of the contract.
Some contracts specify a particular means of communication between the parties. Where a party fails to use this communication, they may jeopardize their rights in a dispute, even if they used proper means of communication, as specified.
Storage Contract Negotiation Tips
As with any type of contract, it is important to understand the terms and clauses of a storage contract agreement before signing. Misinterpretation or lack of knowledge may lead to loss of rights and unexpected costs. For instance, the distinction between a self-storage contract and a warehouse contract is important, as it can determine whether a third party owes a legal duty of care to the person storing his or her possessions. Most individuals are aware of the self-storage conventions and have a general understanding of the obligations involved in such contracts. However, when it comes to warehouse storage agreements, the same cannot be said.
The following list contains tips to consider in negotiating a storage contract agreement:
- Read the fine print. The vast majority of contracts we sign are standard forms. It is in those fine, tiny details that you can substantiate any claims if they are ever needed. Ask questions about anything in the contract that seems ambiguous.
- Don’t pay in advance. Make partial payments, if you can. Paying in advance makes it harder to recover funds should an unforeseen circumstance arise.
- Check for coverage. Often, damage done to goods in transit or in a warehouse is covered under your property and casualty insurance, coverage that extends into the storage facility. If so, it is not necessary to purchase that coverage from the storage contract agreement.
- Check for environmental liability. Businesses providing storage services are covered by the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). Under this legislation, owners of real property can be held liable for contamination by hazardous waste if their name is on the deed. Know all parties who are liable for cleanup if issues arise.
How to Modify or Terminate a Storage Contract
It is also important to be aware of the process for amending and terminating storage contract agreements. Occasionally, an agreement may need to be updated or even terminated, such as when the goods stored no longer match the terms of the contract or the user’s needs change.
The process for amending any contract typically involves:
- an agreement by both parties is required;
- there are legal requirements including signatures and possibly witness signatures; and
- there is no current litigation concerning the amendment.
The process for terminating a contract typically involves:
- an agreement by both parties is most often required;
- there are legal requirements including signatures and possibly witness signatures; and
- there is no current litigation concerning the termination.
If a party wants to end an agreement without the consent of the other, a court action may be necessary. The law will provide the terms under which a contract can be terminated. Amendments to an existing contract need to comply with the law and insurance regulations for storage contracts. These can be complex requirements that vary by situation. Legal advice is often recommended.
Examples and Case Studies
It is sometimes better to get a witness who actually went to law school than it is to get a lawyer who didn’t: take the case of Alter and Wiggins v. S S Site/ Tower, Case No. 30, 2011-2728 (Ohio Ct App. 10/17/2012). In this case multiple claims against the tower site owner for lengthy delays in issuing a permit are addressed with regard to government immunity issues, but a number of issues arise with the underlying claims as well.
While the appellate court’s focus is on the owners’ immunity, it does discuss a number of the other claims in its decision. In particular , the plaintiffs were constructing a 325-foot radio tower under contract with the Piqua Broadcasting Corporation. PBC’s contract with the owner stipulated: "It is mutually agreed that the [t]ower will be located on the property of [the owner], at no cost to PBC, that PBC will furnish electricity for the said tower and, further, that the title to said tower will remain with PBC."
When an owner, again different from the one who entered into the agreement with the applicant, takes an action to prohibit the construction of a tower, as happened in this case, it is crucial to determine whether the easement was present. The appellate court reversed the trial court on this point, ordering the trial court to reconsider.