What is the Five-Clause Contract Check?
The Five-Clause Contract Check is Jaken Energy’s review method for connecting material change, bandwidth, pass-through, renewal, and termination provisions to a hotel’s operating and purchasing plan. It highlights five recurring risk questions without claiming to replace review of the complete agreement.
The method produces a short decision record: what the clause says, what event could trigger it, how the cost or consequence is determined, and who owns the follow-up. A clause summary without a document reference is difficult to verify when the final agreement changes.
Start with the contract guide and assemble every pricing exhibit, meter schedule, and amendment. Then ask engineering, accounting, purchasing, and authorized reviewers to test realistic circumstances. The five topics create a discussion structure; they do not make a negotiated agreement legally complete.
How should material change be tested?
Test the clause against changes the hotel actually expects. Examples include closing rooms for a renovation, adding a kitchen, electrifying water heating, changing laundry arrangements, or installing chargers. State the expected timing and magnitude instead of merely say the property may change.
Ask whether the clause permits repricing, renegotiation, suspension, or termination and under which conditions. Locate any notice or consent requirement. If the clause uses an undefined standard, obtain the supplier’s written treatment for the proposed change rather than assume it is harmless.
The hotel should preserve both historical usage and the future operating plan. Historical data supports the quote; it does not establish the load after a major project. Give purchasing the change assumptions before the agreement is selected so the issue does not become a dispute during construction.
What makes bandwidth language comparable?
Identify the reference quantity, allowed range, test period, and settlement treatment. Two agreements stating the same percentage may create different obligations if one tests monthly consumption and another tests annual volume or individual intervals.
Confirm what happens above and below the allowance. Does the supplier reprice excess energy only, settle a broader quantity, or use another mechanism? Which index and date determine the adjustment? Are underuse and overuse treated differently? Those questions belong beside the price in the comparison worksheet.
The Pennsylvania commission’s business shopping resource shows that offer conditions vary alongside price structures. A negotiated hotel product may add specific volume conditions beyond a public offer description. Review the actual wording rather than infer flexibility from the product label.
How should pass-through provisions be recorded?
Create a component schedule that says what is included and what is passed through. Then identify the source quantity, formula, service period, documentation, and dispute route for each adjustable component. The hotel needs a way to validate the future invoice.
The EIA electricity-price explanation describes multiple cost drivers. That context does not establish whether a specific change is allowed under the agreement. The contractual provision and supporting billing evidence are needed to connect the driver with a charge.
| Clause | Property question | Evidence to retain |
|---|---|---|
| Material change | Will planned equipment or occupancy changes trigger an action? | Operating assumptions and written supplier treatment |
| Bandwidth | What quantity and period define the allowance? | Volume schedule and settlement formula |
| Pass-through | Which costs remain variable and how are they verified? | Inclusion list and calculation source |
| Renewal | What notice must reach whom and when? | Deadline, method, recipient, and delivery proof |
| Termination | What happens if the account leaves early? | Rights, formula, assumptions, and consent requirements |
How should renewal be turned into an operating task?
Record the actual expiration and notice requirements, then assign reminders earlier than the required date. The notice method and recipient matter as much as the calendar entry. A reminder in an employee’s private calendar can be lost during turnover.
Use the 180-Day Renewal Runway to organize data and review work. It is an internal planning method; the contract controls the legal notice period and consequences. Adjust the runway when the actual requirement demands earlier action.
Check what happens without timely action. The answer may include another term, holdover treatment, or another service arrangement. Do not assume that the hotel automatically receives utility default service or that a supplier’s reminder changes the agreement’s notice conditions.
How can termination exposure be examined without guessing?
Identify the rights and formula, then test a clearly labeled scenario that follows them. A supplier’s description of a standard penalty is not enough if the agreement calculates exposure from remaining volume or a market comparison.
As a hypothetical arithmetic illustration only, assume a formula multiplies 410,000 kWh of remaining volume by a $0.018/kWh difference. That component would be $7,380: 410,000 × $0.018. The example does not state that any actual supplier uses this formula, that the difference is current, or that it represents a hotel’s full termination obligation.
If the real calculation includes fees, discounting, different volume assumptions, or offsets, include them explicitly. Ask who provides the settlement inputs and whether the hotel can review supporting evidence. An opaque formula is a reason for further review, not a reason to substitute a convenient estimate.
What is the practical review sequence?
Review the final documents and preserve decisions in a concise record. A quote stage review can become obsolete if the product confirmation or schedules change before signature.
- Gather the complete proposed agreement and establish document priority.
- Match meters, entities, dates, prices, and requested product coverage.
- Test each of the five clauses against the operating plan.
- Calculate clearly identified scenarios where formulas permit.
- Resolve exceptions in writing and obtain authorized approval.
- Retain final documents, compensation disclosures, and implementation tasks.
The Illinois commission’s ABC resource illustrates the separate need to research brokerage registration and conduct requirements. The five-clause method does not verify service authority or compliance with jurisdiction-specific disclosure rules.
Which other terms must still be reviewed?
Payment, credit support, assignment, dispute procedures, data authorization, confidentiality, and service descriptions also matter. So do meter additions, ownership changes, and any credit obligation an affiliated entity is asked to support. Keep those issues in the full review even though they fall outside the five named topics.
Ask how broker compensation is included and whether it varies among offers. The compensation explanation describes the questions needed for a fair comparison. A lower displayed rate cannot settle the decision when inclusions, compensation, and obligations differ.
Finally, connect the approval record to the procurement process. Assign enrollment and first-bill checks to named people. A useful clause review ends with a purchase the hotel can administer and explain, including the risks it deliberately accepted and the conditions it still needs to monitor.
How do you prevent version drift before signature?
Compare the final agreement against the reviewed copy and the decision record. A changed exhibit can affect price coverage or the meter list even when the general terms look familiar. Recheck dates, formulas, exceptions, and any written treatment obtained for planned property changes.
Keep a single designated final document set and identify who approved it. If a supplier sends a replacement confirmation, document whether it supersedes a prior version and route substantive changes back to the appropriate reviewers. Do not treat an updated filename as proof that the agreed terms remain intact. After execution, preserve the signed package separately from negotiation drafts and give accounting and engineering the relevant operating summary. This preserves the connection between the review performed and the obligation actually accepted by the hotel.