If you are like many automobile enthusiasts, you think in terms of pristine machines that look and perform at their best. The dream of the classic car owner is to find a make and model that has the pristine, high market value of a show quality car – whether that car is a 1941 Cadillac, 1966 Mustang, or some other make and model. However, as anyone who has put their heart and wallet into a high-end automobile restoration knows – these types of rare cars often require a contract-based understanding between the owner and the service professionals involved in vehicle maintenance, restoration, or repairs. Consequences here matter as much as dollars.

Without such an understanding, the owner may find that their expectation of service is not met in the salient time frames, the quality of services is not what they expected, and that bear traps or booby traps with dollar amounts attached may exist to disadvantage them. Contracts create a series of reasonable expectations that can be the difference between you putting your vehicle on the road and rusty metal or ashes left behind when a rogue shop fails to deliver.

While a sample managed services agreement can be found in many contexts, the discerning owner of classic and collectible vehicles would be wise to understand how this type of agreement can help them to lock in their expectations and “get it in writing” to avoid disputes that stifle the enjoyment of what should otherwise be rewarding and life-enhancing experiences.

The managed services agreement is a modern development and modulation to the more traditional style of a contract governing an exchange of services for payment. Instead of being a situation of one service for one price, the managed services agreement requires that service providers focus upon the value of the services over time. Imagine a windshield service for a standard windshield wiper replacement. While the labor charge if a person changes their own windshield wiper is very modest, the “lifespan” of the windshield wiper is therefore also very short. If a person sells a vehicle with a worn windshield wiper, it costs them “time and money” in the future, perhaps in the form of a measly $7.99 in a future market, but nonetheless it is damage to value.

Now let’s think about a rare and valuable vehicle. While there may be one hundred rare and expensive vehicles created – there is only one or two in your market area. In other words, if you really want that prize, you really better know the price and better know exactly what the market will bear.

With a managed services agreement in place, one can expect that a particular service provider will make recommendations and provide services that are valuable now, in the future, and hedges and mitigates the risks that are foreseeable in the future. In the short-term, quality services performed by a reputable provider will provide a return on your investment time horizon. In the long-term, one will have a service record upon which they can rely as an asset that has real monetary value in the marketplace.

As mentioned earlier, there are numerous situations in which a managed services agreement might be beneficial. One scenario in which it is frequently used is in regard to an automobile or automobile fleet. A recent experience involved an entrepreneur who had a fleet of automobiles, but utilized a third-party vendor. The managed services agreement came into play when the vendor failed to provide maintenance services as agreed upon. By preparing and entering into a managed services agreement, the entrepreneur was able to anticipate and mitigate the risks of their business projects and investments. Consider an example from an automobile perspective.

Suppose you are planning an investment project where you desire to purchase an automobile for resale in the future. The make and model of the automobile is one that typically appreciates in value over time. You expect the basic services to be performed in a timely fashion, and to a reasonable standard of quality. At the same time, as a result the appreciation of value, it is important to understand the risks in advance.

Consider the fact that once you have driven the vehicle off the lot, your mileage will depreciate the value of the car. Also, once you have transported the car a distance, there will be additional wear and tear and the vehicle may need replacement body parts and paint.

With a managed services agreement, you can anticipate and mitigate the risks of depreciation, both on the value of the automobile and the timing required to sell it. Under a managed services agreement, you can replace existing body parts and continue to maintain the aesthetic quality of paint, even replacing the paint entirely if necessary. When it comes to engines and transmission, it is possible to enter into an agreement expecting to repair and maintain certain engine components, with a re-manufactured or used replacement option being contemplated if further problems arise.

The managed services agreement allows you to prepare and plan for the future and invest the money up front in a way that is thoughtful and appropriately directed to meet your goals and objectives.

The managed services agreement is a useful way to avoid the “lottery” of life where chances are taken with the hopes that all goes well. Instead, with proper planning, forward thinking, and a managed services agreement in place, you can enhance the value of your investment despite the potholes and miscalculations that may be encountered along the way. A managed services agreement can help a person meet their objectives, avoid future problems, and come out on top. Let’s consider the managed services agreement in relation to the automobile ecosystem.

Listed below is a sample of the clauses one might contemplate within a managed services agreement.

  • A) Overview Managed services agreements can be written in any way that serves the needs of the parties. For purposes of illustration, the following outlines the general context and some commonly used clauses.
  • B) Definitions 1) Purpose and Intent 2) Recitals 3) Definitions
  • C) Agreement Provisions 1) Term of Agreement 2) Maintenance Services 3) Billing and Payment 4) Insurance 5) Liability Limitations 6) End of Term Obligations
  • D) Execution

For more information on contracts and agreements, you can visit Wikipedia.