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 ?
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...
-Virgil Residential/Commercial Inspector 5 Star Inspections Member IAEI
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 ??
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.
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" .