Perspectives

If one of your goals in 2025 is ensure your contracts are more secure, you’re not alone. Contracts are often viewed as administrative necessities, but for businesses involved in capital equipment sales-whether it’s large machinery, medical devices or construction materials-contracts are powerful tools for mitigating financial and legal risks. Poorly drafted agreements can lead to costly disputes, lost revenue, and exposure to liabilities that could threaten the financial stability of your business. By incorporating key provisions, you can safeguard your operations and reduce potential risks. Let’s explore three critical contract terms every capital equipment provider should prioritize.

Limitation of Liability: Safeguard Your Financial Interests

A limitation of liability clause protects your business from excessive financial exposure by capping the damages you may be required to pay in the event of a dispute or breach. For capital equipment providers, this protection is crucial given the significant cost associated with product failures, delayed delivery, or operational downtime.

How it works:

This clause limits liability to a specific dollar amount, such as the contract value or a predetermined ceiling, ensuring your exposure is manageable. For example, if a client incurs significant losses due to malfunction, your liability could be limited to the purchase price of the product rather than broader, unpredictable costs like lost profits or third-party claims.

Best Practice:

Be precise in defining the cap and consider excluding specific types of damages, such as consequential, incidental, or punitive damages. Keep in mind that enforceability may vary by  jurisdiction, so consult legal counsel to endure your contracts are legally sound and enforceable.

Warranties: Clearly Define Your Obligations

Warranties establish the scope of your obligations and help set customer expectations, which is critical in capital equipment sales where trust is essential. Warranties can be express (explicitly stated) or implied (automatically applied by law). Managing these warranties properly can prevent misunderstandings and legal disputes.

Express Warranties:

These are explicit promises regarding the product’s performance, quality, or lifespan. They’re often detailed in contracts, marketing materials, or technical specifications. Missteps in how these promises are worded can lead to overcommitments and liability exposure.

Implied Warranties: These include written guarantees like the warranty of merchantability (the product will perform as expected) and fitness for particular purposes (the product is suitable for the buyer’s specific need). While these are automatic in many transactions, they can often be limited or disclaimed through carefully crafted contract language.

Best Practice:

Specify what is covered and for how long. If applicable, disclaim implied warranties to avoid unforeseen obligations. For example, a clause such as “The product is sold as-is with no implied warranties” can significantly reduce your risk.

Indemnity Clauses: Shift Liability for Third-Party Claims

Indemnity clauses allocate the financial responsibility for third-party claims to a specific party, which is essential in capital sales where the risk of product-related claims is higher. These provisions protect your business from bearing the financial burden of lawsuits related to product performance, safety, or improper use by the customer.

How it works:

If a customer or a third party files a claim due to a malfunction, defect, or accident, an indemnity clause can transfer the responsibility for legal costs, settlements, and damages away from your company. This is particularly valuable in industries like construction, healthcare, and heavy equipment, where operational risks are significant.

Best Practice:

Ensure the indemnity clause defines the scope of claims covered and the extent of liability. In some cases, mutual indemnity-where both parties agree to indemnify each other under certain circumstances-can provide balanced protection.

The Bottom Line: Protect Your Business Through Smart Contracting

For capital equipment providers, contracts are more than legal agreements-they are essential risk management tools. By integrating provisions such as limitation of liability, clear warranties, and well-structured indemnity clauses, you can significantly reduce your exposure to financial loss and legal disputes.

Taking the time to review and refine your contracts with experienced legal counsel ensures that these provisions are both enforceable and tailored to your unique business needs. Protecting your business today with robust contract terms can prevent costly issues down the road and strengthen your financial stability. Take action. If you’re unsure whether your contracts effectively reduce your risk, now is the time for a review. Contact Wagner, Falconer and Judd for expert guidance on drafting capital sales contracts designed to protect your bottom line.

Ensuring timely and accurate lien filing is a critical part of securing payments and protecting company revenue. However, with the complexities of state-specific lien laws and strict filing deadlines, managing the lien process internally can be fraught with challenges that put even the most organized teams at risk. Outsourcing lien filing to professionals, particularly legal experts, can provide much-needed relief and strategic advantages.

Here’s when you should consider it-and why partnering with a law firm can safeguard your interests.

The Challenges of In-House Lien Management

Credit professionals face numerous obstacles in managing liens, including:

• Complex and Varied State Laws

Each state has unique lien laws governing what qualifies for a lien, notice requirements, filing deadlines, and the duration of the lien’s validity. Missing a step or misunderstanding a state-specific requirement can invalidate your lien, leaving your company unprotected.

• Strict Deadlines 

Many states have short and unforgiving deadlines for filing preliminary notices, liens, and other associated documents. Balancing these deadlines with other pressing financial duties increases the likelihood of errors.

• High Stakes

An improperly filed lien doesn’t just cost your company money; it can strain relationships with clients and business partners, damaging future opportunities.

• Resource Constraints

Even the largest companies are often stretched thin managing accounts receivable, disputes, and other tasks. Taking on lien filing adds an additional layer of responsibility that can overwhelm internal teams.

Key Benefits of Outsourcing Lien Filing to Legal Professionals

Bringing in a law firm with expertise in lien law can alleviate these pain points and position your company for success. 

• State-specific Expertise

Legal professionals stay up-to-date with state-specific lien requirements and legislative changes, ensuring that filings comply with all laws and regulations.

• Deadline Management

A dedicated legal team will ensure that notices and filings are submitted on time, mitigating the risk of losing lien rights due to missed deadlines.

• Accurate Documentation

Attorneys can handle the meticulous preparation of lien documents, reducing the likelihood of disputes over improper filings.

• Strategic Advisory

Beyond filing liens, legal counsel can advise on how to structure contracts to strengthen lien rights and improve your position in case of disputes or non-payment.

• Improved Efficiency

Outsourcing lien management allows your team to focus on core responsibilities without sacrificing lien protection or compliance.

When to Make the Switch

Consider outsource lien filing if:

• Your company operates in multiple states, each with different lien laws.
• Your team struggles to meet the deadlines associated with preliminary notices and lien filings.
• You’ve experienced errors or invalidation in past lien filings.
• You’re expanding into new markets with unfamiliar lien laws.
• Your team has a high workload, and lien filing is becoming a distraction from core financial tasks.

Why Partner with a Law Firm for Lien Filing?

While some companies may consider lien service providers, partnering with a law firm offers an unparalleled advantage: comprehensive legal protection. The attorneys at Wagner, Falconer & Judd don’t just file liens; they provides advice on how to prevent payment disputes and protect your company’s rights under the law.

At WFJ, we specialize in helping you secure your business through effective lien filing and legal counsel. Our team is experienced in state-specific lien laws and deadlines, ensuring your company is always protected.

Don’t let the complexity of lien filing jeopardize your revenue. Contact us today to learn how we can streamline your lien processes, so you can focus on growing your business with confidence.

Take Action

If you’re ready to reduce risk and maximize efficiency, we’re here to help. Reach out to WFJ to schedule a consultation and take the first step toward stronger lien protection.

Filing a lien is a powerful tool for securing payment, especially in industries with complex credit transactions like construction, manufacturing, and large equipment leasing. However, errors during the lien filing process can invalidate your claim and put your payment at risk. Avoid these common pitfalls with our checklist to keep your lien rights intact.

1. Understand Your State’s Deadlines: Lien laws vary by state, and missing deadlines can void your claim. Familiarize yourself with each state’s specific timeline for filing a Notice of Intent, the lien itself, and any additional notices.
2. Send Preliminary Notices: Many states require you to send preliminary notices before filing a lien. Ensure you send these on time, or your lien claim may be invalid. Even when not required, a preliminary notice can remind customers of payment obligations.
3. Files Against the Correct Party: Identify the property owner and parties in charge of payments. Filing against the wrong party can delay the process or invalidate your lien.
4. Double-Check Contract Details and Amounts: Include accurate information in your lien claim, including contract amounts, dates, and any unauthorized changes. Overstating or misstating your claim amount can raise legal issues, jeopardizing your lien.
5. Prepare Complete Documentation: Gather all supporting documentation, including contacts, change orders, and proof of delivered services or goods. Detailed records not only strengthen your lien but are crucial if your claim goes to court.
6. Avoid DIY Errors-Seek Legal Help for Complex Filings: Liens in specialized industries may require additional steps or filings. Partnering with legal professionals who understand industry specific nuances ensure compliance and strengthen your lien rights.

By following this checklist, credit, and finance professionals can mitigate risks and increase the likelihood of successful lien filings, ultimately protecting your company’s cash flow and ensuring timely payments.

Addressing defaults and outlining remedies within contracts is crucial for protecting businesses from financial risk. For finance teams, it is essential to ensure that these provisions are robust and clear, providing them with the necessary tools to respond effectively in the event of a customer’s default.

A default occurs when a party fails to fulfill its contractual obligations, such as making timely payments or or adhering to the terms of a lease or purchase agreement. To mitigate the financial impact of a default, contracts should include late or missed payments, failure to maintain insurance, or unauthorized use of equipment. By clearly defining what constitutes a default, the dealer can act swiftly and decisively when a breach occurs.

Once a default is established, the contract should provide a range of remedies to protect the businesses’ financial interests. Common remedies include the right to repossess any equipment, acceleration of payment obligations (where the full amount due becomes immediately payable), and the imposition of late fees or interest on overdue payments. The right to terminate the contract and recover damages, including the cost of retrieving and refurbishing the equipment, should also be clearly articulated.

To further strengthen these protections, finance teams should ensure that contracts include provisions for legal fees and costs, allowing the dealer to recover expenses incurred in enforcing the contract or pursuing legal action. Additionally, contracts should specify that any waiver of a default or delay in enforcement does not constitute a waiver of the dealer’s rights under the contract, preserving the dealer’s ability to enforce the agreement in the future.

It is also important to include dispute resolution mechanisms, such as arbitration or mediation, which can provide a more efficient and cost-effective means of resolving conflicts without resorting to lengthy litigation. These mechanisms should be clearly outlined in the contract, along with the steps required to initiate them.

Finally, finance teams should work closely with legal counsel to ensure that default and remedy provisions are tailored to the dealership’s specific needs and are compliant with applicable laws. Regular review of contract templates and updates in response to changes in the law or business practices is essential for maintaining effective protection.

Closing out the year can be a hectic time. Implementing some of these tips in to your process could help clear pesky receivables from your ledger before the end of the year and help you breeze through year-end close next year:

• Perform a close calendar walkthrough with all the key parties involved.
• Prepare a reconciliation for every account, even accounts with no activity.
• Prepare activity roll-forwards for accounts receivable and bad debt reserve, fixed assets, intangible assets, goodwill balances, etc.
• Review your Aged Accounts Receivable report, try and collect from clients with 30-60 day past due accounts. These are most likely to pay quickly.
• Check in with clients that possess 60-90 day past due accounts and make sure they have received all your communications about their debt.
• Review uncollectible accounts and write-offs. Identify what went wrong to improve your process moving forward.

If you would like to clean up your collection process for 2023-the experienced attorneys at Wagner, Falconer & Judd are only a phone call away.

On May 4^th, 2020, an Emergency Executive Order was signed into effect, placing suspensions on a number of collection activities related consumer debtors. The Order suspended “service of a garnishment summons on a consumer debtor or consumer garnishee.”* The order also suspended obtaining “information about a consumer debtor’s assets, liabilities, and personal earnings.”

On January 7^th, 2021, Executive Order 21-02 amended Order 20-50 to add levies to the suspended activities as well. Up to that point, only garnishments and formal demands for disclosure of financial information had been suspended. The updates in Order 21-02 added a significant limitation on the suspension of garnishments and levies by adding language limiting the suspension of judgments entered on or after May 4^th, 2020 and language allowing for wage garnishments and levies on judgments entered prior to May 4^th, 2020. Previously, the suspension was on all judgments old and new.

On May 6^th, 2021, the MN Governor issued Executive Order 21-21. This order provides a “sunset” provision on Orders 20-50 and 21-02. Movement on this Order relies on the determination by the Commissioner of Minnesota Department of Health to confirm that seventy percent (70%) of people sixteen years of age and older have received at least one dose of COVID-19 vaccine.

Effective two business days after that confirmation, or on Wednesday, June 30^th, 2021 at 11:59 pm, whichever occurs first, Executive Orders 20-50 and 21-02 (as well as others) will be rescinded. Meaning, on July 1, 2021, or perhaps earlier, the suspension of garnishments, levies and demands for disclosure related to consumer debtors will no longer be in effect.

If you have questions about whether you may be effected by any of these changes, please reach out to one of our Commercial Collections attorneys.

*”for the purpose of this Executive Order, the terms ‘consumer debt’ and ‘consumer garnishee’ have the definition of ‘debtor’ and ‘garnishee’ as used in Minnesota Statutes section 571-712, subdivision 2(b) 2(c), when applied to debtors and garnishees who are natural persons and whose debt originated from the purchase of goods or services purchased primarily for a personal, family, or household purpose, and not for a commercial, agricultural, or business purpose.

Executive Order 20-50

Executive Order 21-02

Executive Order 21-21