Law & Order: Writing contracts that work
By John Kenney, Home Works Media Group
Article reprinted courtesy of HomeWorks Sourcebook
When you hire a home service provider, especially for larger jobs, it is essential that you obtain, in writing, a clear, concise and legally enforceable contract that safeguards you, your home, and your wallet. Contractors will often prefer to do simplified or "boilerplate" contracts that are easy to create. These may be perfectly fine, but they may also not be well tailored to your specific needs or offer the level of legal protection that you, as the consumer, may want.
Ideally, you should have the kind of relationship with the contractor that allows you to develop a contract that is fair and balanced- protecting both you and them. Especially if it's your first time working with the contractor, go through every clause to make sure it accurately represents what you want done. Use the contract writing effort as a test of your relationship with the contractor. Can you communicate well? Are they responsive? Can you reach mutually agreeable solutions? And use the contract as well as a vehicle for ensuring that you and the contractor have both fully scoped out the work and are clear on what needs to be done. The clearer you can be up-front about the project, the more likely it is that both you and your contractor will be happy as the job progresses and when it is finally done.
It is unlikely that your contract will be so complete as to cover all of the suggested topics below, but these topics should at least be discussed and addressed to your satisfaction before you sign a binding contract.
CONTACT INFORMATION
Address, phone number, license numbers (if applicable), insurance information, and contact person for the contractor.
PROJECT DESCRIPTION
A detailed description of the work to be done, including the specific tasks the contractor will perform. This is perhaps the most critical section of the contract because the more accurate and definitive it is, the less likely you or the contractor will be disappointed by what happens next. When either the homeowner or the contractor is unclear about what is to be accomplished, it sets everyone up for failure!
SCHEDULE
A specific start date and estimated completion date for the project. Contractors are notorious for being late to start projects and even later to finish them- try to lock down your contractor as tightly as possible. One option is adding penalties if the contractor completes the work late. Most will reject this, but try anyway.
PRICING
All aspects of the pricing, including the actual price (or a not-to-exceed cost if the pricing is an estimate only), contract breakage fees (if any), late completion penalties (if any), and the payment schedule. A typical payment schedule involves paying by thirds (1/3 up front, 1/3 part way through, and 1/3 AFTER the work is totally complete). A breakdown between labor costs and materials costs can eliminate many misunderstandings.
MATERIALS
A list of materials needed and who is responsible for providing them. Be as specific as possible, including brand names, models, colors, etc. For the materials you must buy, ask that the contractor tell you in advance when they will be required. For materials the contractor will buy, ensure that the contract provides for adequate purchase allowances.
PERMITS
Specify what permits will be required and who is responsible for obtaining them. Usually this should be the contractor, but not always. To be eligible for certain state consumer protection programs, it is best if the contractor obtains the permits.
CHANGES
Outline the procedures for making project changes (i.e., change orders), including their effect on pricing. This is a critical area to address because there will inevitably be changes, perhaps even big ones, and you'll want to know how those will be handled up front. Keep in mind that better up-front planning translates into fewer changes. And be respectful of the contractor if and when you do initiate changes.
HOMEOWNER OBLIGATIONS
Explicitly discuss what your obligations will be and when you will be required to fulfill them. The homeowner will often be required to make many decisions during the project, sometimes in rapid-fire succession or on an urgent basis. Be sure you are ready to do your part and are clear about what you will need to do when.
CLEAN-UP
Outline the clean-up and debris removal procedures to be used. Especially if you are going to be living in the home during the project, you'll want the contractor to be as neat as possible. But construction is messy business, so be ready for dirt, dust and other inconveniences.
SPECIAL ISSUES
Identify things the contractor should NOT do (e.g., removing a chandelier for paint work, etc.) and address any other special issues that may apply.
DISPUTES
If possible, include a dispute resolution procedure, such as arbitration to cover you in case major problems arise.
WARRANTIES
Warranty details, including time in effect, warrantor or guarantor, and any dollar limitations. A full warranty provides standard warranty rights for the specified period, but any limited warranty terms should clearly spell out what is covered and for how long.
SIGNATURES
Contract should be signed by an authorized representative of the contractor (which may not necessarily be the person doing the work) and by you. Make sure you get a copy.
John Kenney is the publisher of HomeWorks Sourcebook
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