I am surprised how few contractors dont have signed contracts before they start a job. 99 out of 100 contactors that come to me, either for a collection issue, or because they are being sued, tell me the same thing "oh, no we made the deal on a hand shake." This is such a bad practice !!! Most of the problems that a client comes to me with can be streamlined or avoided, had the contractor had a well written contrct signed by the customer. Just to satisfy my curiosity, how many of you guys get signed contracts before starting a job ?

Ah your timing is right on. Had it out today with a GC about change orders. I rarely sign a contract on residential but always do on commercial. I think that's about to change.

Pardon the long story and possible threadjack...

I went through the trouble of writing out a proposal (based upon Mike Holt's sample, and lots of revisions over time) for my latest job. Two pages of 9 point font (tiny) and two pages of electrical "floor" plans.

Things were spelled out to the tee.

It was delivered with following statement: "Go over it, if you'd like to make any changes beforehand, let me know."

No changes were needed, except to add for trim out as well. (he had said rough and service only before...)

So, I do, they look it over for an hour or so, call me back, and they give me a 29 page contract. "You start Monday" they say. I say, "You gonna let me read that first?" and he says "it's based on your proposal" as he hands me a pen. So I'm thinking: better sign it or lose it... and then I take the contract home to read it.

Seems, even thought I completely spell out what constitutes a change-order, they can define what is and isn't a "minor change" which "will not effect the price" etc.

Plus there are other concerns...

The project manager went on vacation on Thursday. Another man came to discuss the plans, turns out I had the wrong set, and I've wasted two days hanging boxes. I'm calling them changes... Joe says don't make waves. The GC says we're responsible for phones, cable TV, HVAC and a lot of other things that my proposal says were are definately not responsible for...

At any rate... If both the proposal and the contract are signed, and there are any descrepancies between the two, who wins?

In the real world, if I make waves about this, I probably won't work there (for prime rate in this area) anymore...

O.K., I have to confess that I don't get signed contracts.

If it's a big job like a complete re-wire, I will give out a printed schedule of what devices are going where for the customer to check over first. At least then if he comes back and later and says "What about the 12 recessed lights in the kitchen?" I can point at the schedule.

I have learned not to start a job without a signed proposal. I use Mike Holt's as a starter. If the general has a contract he wants to use, read it first- then get rid of all clauses that conflict with your proposal.
Some GC's contracts let them control you, your company and your life without cost to them. They can make any changes they want without paying for them, demand overtime and change schedules at no cost.
Be careful. Make sure what you sign is what you have agreed to do.
It

RMIESQ:
How about a 'Letter of Aggreement', I will write one of these in plane language, since I know no other, and make two copies and outline in detail what the job will include. and the customer and I both sign and date the Agreement.
It isnt exactly a contract but at least it is a confirmation between the two of us and in writing what the charges are and what is to be done and when payment is expected.
Does this sound ok ??

-Mark-

I have a number of GC's that are comfortable with a handshake, but i reserve this for T&M , and the draws will be in my favor..

As to contracts, i do them up like 66'. I will foward a pre-bid checklist for the GC to fill out, the info is then written up contractually.
I have found this to aid the
'other 'lectrician always included it'
line.......

Every contract should be broken down in to two parts. Job specific and standard clauses. Job specific is "4 high hats, 2 new outlets, new ceiling fan" This is essential ! But, In my opinion, even more are the standard clauses that should be in every contract, now these will be different from contractor to contractor but the same for each one of that contractor's jobs. What am I talking about, these are the things that should be described as "How I do business" Things like "final payment upon job completion or within 14 days", or "3% finance charge on all balances over 30 days", or a great example is in NY you cannot recovery attorney fees, so I hire you to do my service and decide not to pay anything on the $1400 job, you hire a lawyer to collect and he does but he takes $450 to do so, your recovery is $950, well if you contract has a term that states a customer found to be in default will be liable for attorney fees you can collect that $450 expense. A term I encourage every contractor to include is mandatory arbitration clauses- lets face it court sucks, and so do lawyers, and unfortunately you cant do the former without the latter. A mandatory Arbitration clause prohibits either party from suing in court and rather requires that any disputes be brought in front of an arbitrator. No need for a lawyer, no legal fees, faste resolution of disputes. Both parts are important to CYA, dont be foolish do it on every job.

Motor T,

Plain English is the best way, no misunderstandings is the ultimate goal. A letter of agreement is great, what ever you want to call it is fine. Truth of the matter is if its signed, regardless of what you call it, its a contract. Do it on every job! So you dont get taken advantage of, by having a pre-printed "letter of Agreement" with your terms, and all you have to do is fill in the job description, it leaves no question unanswered and gives you the home field advantage.

[This message has been edited by RMIESQ (edited 06-16-2002).]

I write up a proposal for a quote. An estimate is just an estimate and I make the terms clear. I don't get into alot of legal mumbo jumbo just the work to be done the price and the payment terms. I sign and send two copies with a return envelope addressed and stamped. Seems to work out pretty well. I have seem some local plumbers contracts that have a half page outlining the work and two pages of small print outlining the disclaimers one of which I liked, it read " not responsible for keeping pets in house or yard" .

RMIESQ,

I have been doing the "signed proposal" thing for years and have not have had any trouble. But, heres my question;

I work out of Fayette County, PA. We are going to do a job in Washington County, PA in a mall. The owner of the store with whom our contract will be is from Ohio.

In the event of a problem or disagreement, where would the case be heard? Can I put a clause in the contract for the case to be heard in Fayette County, PA?

While I'm here, this is the "fine print" on my work orders. How does it look to you?

Since I have been reading your advice, I'm thinking of adding something about legal fees.

BY THE SIGNING OF THIS CLAUSE, I AUTHORIZE THE CONTRACTOR'S SERVICEMEN TO ENTER THE PREMISES SHOWN ABOVE TO REPAIR AND/OR INSTALL ELECTRICAL WORK AS
DESCRIBED BELOW. BY THE SIGNING OF THIS CLAUSE I ALSO PROMISE TO PAY FOR ALL WORK PERFORMED AND MATERIAL USED IN ACCORDANCE WITH THE RATES AND TERMS AS
AS SHOWN IN THIS FORM. I ALSO UNDERSTAND THAT THE ESTIMATED TIME SHOWN ABOVE IS FOR SCHEDULING PURPOSES ONLY AND MAY VARY ACCORDING TO THE COMPLEXITY OF
THE JOB OR DUE TO UNFORSEEN CIRCUMSTANCES. I AM ALSO AWARE AND AGREE THAT ANY NECESSARY PATCHING, PAINTING OR OTHER SITE RESTORATION SHALL BE DONE BY
OTHERS AT NO COST TO COLL ELECTRICAL SERVICES.

This clause is in the middle of the form with a space to write our "time in". The customer signs this area upon our arival before work begins. They sign another area along with "time out" when the work is done.

This is a form that I made in MS Works with some wording that I got from some preprinted forms with some of my own additions.

If anyone would like to have a copy of this form for their own use, email me at brian@collelectric.com.

Electricmanscott,

If this works, GREAT. If it aint broke dont fix it. Obviously the best agreements addresses every possible "What if", for example "What if the dog gets out?" or "What if additional supplies are needed?" or "What if a dispute arises?" Get my picture. The more terms in your agreement, the more "What ifs" are addressed. But this must be balanced, because a lengthy contract will/can scare off an apprehensive customer.

Master 66,

That clause is fine with me, it addresses a series of points. As I state above you can add a whole lot more, to address even more; but you have to balance what are the major problems you want to intercept. If you decide to add a legal fees clause, it can be tacked write on the end of your current fine print. As far as the County of an law suits: Choice of forum clauses are commonly used. It saves you having to truck out to a a different venue to defend yourself if a dispute arises. Obviously, an unhappy customer can still sue you elsewhere, but your attorney will prevail on getting it dismissed or swithched to the venue you designate: if you have that signed contract.

RMI, Do you recommend templates for these agreements and if so, where does the average layman get them?

If you need info on change orders and such, there's a website for Project Mgmt Toolbox items (documents mostly) developed by Clemson at http://www.eng.clemson.edu/cica/Toolbox/toolbox and there are some links to some helpful things.

Go to a Local attorney, Most have done this for other contractors 100X before, so to duplicate for you should be cheap. Then add and subtract terms to suit your particular needs. Years of Experience will end up creating the best contract

Rob,
i've been told ( rumor mill here..) to add some fine print as to interest on the bottom of bills. (1.5%mo, 18% annum past 30 days)

DEFINITELY!!! If you owe money to a creditor you'll have to pay, if someone owes you money, make them pay. You can always waive any interest due later, but you cant add it in if they dont sign off on it.

Since this is such an important subject, I pulled an article I had written last year for SCECA- Here it is, hope its helpful.

THE CONTRACT

The most common phone call I get is in regard to collection of a no paying customer. My first question is usually “is there a signed contract ?” I have yet to have an electrician say “yes”, usually the response is “I gave them a written proposal, and they accepted it” or “No, the deal was on a hand shake.” This is a poor practice ! If the deal goes sour you need proof of a legally binding agreement (a contract). The contract will serve two main purposes: (1) It will show that the customer agreed to the arrangement (i.e. you upgrade my service and I will pay you); (2) It will lay out the terms (the “what ifs”, the “whens”, the “how much”.)

Now part one of the contract is usually pretty easy to prove. Partial payment always can show that you and the customer had an agreement, commencement/acceptance of work is indication that an agreement exists. Part two is tougher to show, say you and the customer agree to upgrade his service: without a contract who determines when payment is due, or what happens if additional materials are required or even a term as essential as what is the final amount due. Well everyone who has called me looking to collect from a non-paying customer has said that they explained all these terms to the customer before they started the work. Well guess what chances are if the customer isn’t paying you , and your suing him, he’s going to lie too. And in a situation of he said, she said the court will utilize Course of dealings, industry standards and statutory source of terms. In other words, the last time you did a service change for this customer you included a new mast, or most other electricians in the area provide a new mast when upgrading the service, so this time you should provide a new one as well.

What am I saying, I am saying at the time you make the agreement, take control of the situation. Don’t leave the terms up to someone else, you set the terms, not verbally, but in writing. Make up blank contracts with the terms you want, and every time you sell a job- just fill out the job description.

What terms do you include ?

Recently a SCECA member called me on a collection matter, I was pleasantly surprised to hear that he had a signed contract. After we spoke for a while and I was informed that many of the terms he should have in there weren’t there, I asked “who drafted this contract ?” he informed me that his “Printer” had it as a standard form. O.K., first of all, for the same reasons that you guys as electricians should not be performing medical check-ups, a printer should not be drafting legal documents. Second, a standard contract is an oxymoron, a contract for an electrician must be customized for his needs, and for obvious reasons cannot be the same a contract for a real estate broker. A few basic terms that should be in your contracts are:

Merger clause- This states that the extent of the agreement is what has been memorialized in the writing. This avoids the customer from claiming or presenting any other evidence that “you said you were going to do this as well” or “the other proposal included this.” Again it states that the signed agreement is the complete and final arrangement.

Choice of forum- If the deal goes bad, what happens. Law suits stink, they can be lengthy and are always expensive. Put a mandatory arbitration clause in the contract. An arbitration is an informal proceeding in which you can represent yourself (thus cutting costs) and the arbitrator renders a legally binding decision. With this clause, if the customer initiates a law suit, you can have the case removed from the court system and put in the hands of an arbitrator.

Payment Schedules- My understanding is that most electricians do 1/3 before the job, 1/3 after the rough in and the remainder upon completion. But say a job is mostly supply expense and little labor, for instance provide and install a chandelier: your going to want more than 1/3 before you go buy the chandelier, it seems that it could quite possibly cost ¾ of the entire job.

Additional expense- What happens if you estimate 200 feet of wire, and you end up using 300. That’s 50% additional materials. It would seem that the first choice is not for you to eat that additional expense. Or what happens if you open up the wall to change an outlet and you find brittle clothe covered wire, who’s responsible and at what cost ?

Attorney’s fees- If you have to sue to collect monies due to you, who pays for your legal representation ? What’s the sense of suing a customer over a $500 bill if you have to pay your blood sucking lawyer $350. A short clause can be incorporated in to your contract that would make the customer responsible for your legal expenses.

Again, all I am saying is speak to an attorney, establish some basic terms that you can have printed on your contracts of even include on your proposals. This will allow you to take control of the situation, so that you can determine the terms of your agreement, rather than leaving it up to a judge.

Thanks RMIESQ. You are truly an asset to this forum.

I've written articles for various monthly technical publications over the years. Of all the British publishers I've dealt with, the arrangement has generally been that the editor just accepts a manuscript and sends me a check for his calculated amount when it runs. All fairly informal, and I've never had any cause for complaint; in fact I've been treated well.

When I did some work for Popular Electronics (Gernsback, New York) a few years ago, I was quite surprised to get a contract to sign stating the amount they proposed to pay, exact details of copyright assignment, etc.

As I said, I've never had any problems here, but I can certainly see how the signed contracts would make things much easier if there ever were a dispute.

wow, much to consider Rob......

safe to say that they did not touch on this in apprenticeship school........