Running a business in Alaska is a risky proposition, more so than most anywhere else in the United States. There are at least a half a dozen reality TV shows that are based on this premise. When businesses operate in Alaska, particularly remote areas of the state, they must consider the unpredictable and harsh weather conditions, the often unforgiving and dangerous terrain and water ways, the transportation and logistics required, and what vendor and staffing limitations may exist given our marketplace.
Although these issues are usually contemplated by businesses when quotes are given, bids are placed, financial terms are negotiated, and deals are struck between two companies, they often are not adequately addressed in the parties' contract. With some effort, many of the liability risks associated with doing business in Alaska can be addressed and fairly allocated in a written contract. Examples of how parties can allocate liability risks in their contract include:
Ensuring that deadlines may be reasonably adjusted, contract performance may be excused, and possibly financial terms equitably adjusted due to events of "force majeure" and that the definition of "force majeure" addresses some of the extreme weather conditions and transportation challenges that Alaskans may face. But, all parties also need to make sure that the definition of force majeure does not excuse a party's failure to reasonably prepare for foreseeable conditions. For instance, the definition or provision in the contract should clarify that a party's delay or failure to perform will not be excused if the party does not reasonably account for the bridge that everyone knows regularly washes out, if a road always floods in the spring, or if the only way in or out of an area during a particular part of the year is by snow machine.
Confirming that the parties have an independent contractor relationship and specifically stating that each party is responsible for its own insurance (including workers' compensation insurance), taxes, employees, overhead costs and expenses, and so forth. Merely stating that the relationship is one of an independent contractor, however, is not enough. The parties must also take steps to show the parties are separate and distinct, exercise their own direction and control, and show that other formalities are in place to create a true divide between the contracting parties.
Clearly defining what standard a...