In this article, we will discuss the various types of laboratory service contracts and warranties available, how to choose the right one for your lab, and how to ensure that your contract is enforced.
Laboratory service contracts and warranties are important tools that enable laboratory service providers and their clients to ensure that services are performed correctly and that products and services are of the highest quality.
A maintenance agreement for the equipment addresses two of the most significant threats to any laboratory: the cost of the analytical instruments and their downtime.
As the future of Analytical instrumentations is variable, the idea of the help being given by administration engineers is a key thought. After the original warranty agreement has run its course, it’s critical to make sure you have the right amount of maintenance coverage. By comprehending standard service contract language and negotiating favorable terms, any laboratory can save significant money and time.
The lab must first determine the necessary level of equipment service coverage. Balance is required in the laboratory’s budget for instruments that require external funding and service contracts. Because very few laboratories are able to afford to have all of their instruments covered by an external service at the highest level, it might be worthwhile to think about hiring an in-house service engineer.
When considering the purchase of new service agreements/contracts, lab managers should pay sufficient attention to the following key aspects as stated below.
1. Time duration of Service Contracts: It is crucial to completely understand the start and end dates of the service contract before making a purchase. The contract’s duration can be adjusted to meet the requirements of the specific laboratory.
2. Payment terms: Numerous contracts and suppliers offer a wide range of payment alternatives. A single upfront payment, quarterly payments for a contract with an annual duration, or annual payments for a longer-term contract are all possible options. The opt-out clause for the laboratory is typically absent from long-term contracts, but they do allow the manufacturer to end the agreement before its expiration for any variety of reasons. Think about the lab’s budget plan before choosing the optimal installment schedule. Negotiating payment terms will help you find the best arrangement for your lab.
3.Cancellation or termination before the contract’s end date : Never presume that a service agreement can be ended before its expiration date. If they are allowed at all, early cancellation or termination costs, which can range from 25% to 50% of the remaining contract expenses, can be expensive.
4. Auto-renewal clause: The automatic renewal provision automatically extends the service contract for an extra term when the expiration date draws near if written notification of intent to terminate is not received by the deadline. Once a contract is automatically renewed, any early termination or cancellation fees become due. Consider carefully if autorenewal is appropriate for your lab. If not, discuss removing the autorenewal clause before signing.
5. Opt-Out Clause: The opt-out clause for the laboratory is typically absent from long-term contracts, but they do allow the manufacturer to end the agreement before its expiration for any variety of reasons. Negotiating an opt-out clause with light penalties is crucial, especially for lengthy contracts. The provider’s and the laboratory’s opt-out provisions should at the very least be equivalent.
Additional terms to consider depends on the covered equipment’s manufacturer, make, and model, the service contract may include additional terms.
• Are replacement components/ Spare parts easily available, and if so, are they new or refurbished?
• What kinds of services is part of a service call?
• Is remote service guidance available?
•Will the vendor or lab personnel cover the price of travel, extra time, downtime, and other logistical costs?
• How quickly will a technician arrive when a service call is made?
• What obligations does the provider owe the laboratory under the terms of the contract?
• Does the contract cover regular maintenance and/or calibration?
• Does the contract exclude the instrument in any way? In that case, what exactly are omissions and exclusions?
Be prepared to query terms that are ambiguous, vague, or confusing before you sign the contract. It is crucial to request explanations for any terms and conditions that are challenging to understand in order to guarantee that any changes are included in the final service contract. Your responsibility as lab manager is to negotiate any terms and conditions and settle any disputes pertaining to service contracts.
Check list for purchase of equipment with regards to warranty and maintenance.
- What is the time period of warranty (when does warranty time period start and end)?
- Does Labor and repairs that are covered by the warranty?
- What are the omissions/exclusions for warranty?
- What is the time period of maintenance contract (when does maintenance time period start and end)?
- Are replacement components/ Spare parts easily available, and if so, are they new or refurbished?
- What kinds of services is part of a service call? Is remote service guidance available?
- Will the vendor or lab personnel cover the price of travel, extra time, downtime, and other logistical costs?
- How quickly will a technician arrive when a service call is made?
- What obligations does the provider owe the laboratory under the terms of the contract?
- Does the maintenance contract cover regular maintenance and/or calibration?
- Does the contract exclude the instrument in any way? In that case, what exactly are omissions and exclusions?
- Does your service/maintenance contract have Auto-renewal clause, Opt-Out Clause, cancellation and termination clauses? Have you read them clearly? Is there any ambiguity?