broken contract? - Contractor Talk - Professional Construction and Remodeling Forum

C.C.R. · 01-03-2007, 08:44 AM

I've posted many times about this particular job recently. The customer is acting as his own G.C. When we signed the contract I had made up a payment schedule, I gave him a couple of options, The one he chose (and signed) said, "$ Xxxx.xx approximatly every two weeks". Now there has been the usual construction delays, waiting for materials, waiting for other trades, plus the holidays. He already was a week late with one payment I had to verbaly ask where is my check his answer was " Oh I was going to hold it for another week because of progress" (What happened was I had to bounce back and forth between sheetrock and T&G pine so the electrician and plumber could fix there mistakes.) The last invoice I gave him was on 12/14/06 I talked to him on 12/23/06 and he said he would call me on the 26th with a partial payment (due to not having any money) (Yes I try to be as accomodating as possible for my clients, sometimes a little too accomodating.) Finaly my question is the payment schedule that was signed and dated by him was on a bi-weekly basis with him holding the last payment until project was complete. It's not based on how much work is done. By not living up to the payment schedule, did he break the contract? Any insight would be greatly appreciated

Stone Mountain · 01-03-2007, 09:13 AM

A tricky one. From his point of view, he's paying for work done, which is supposed to progress at a certain rate. If from one cheque to the other not much is happening, then he is of course going to be reluctant to pay. What if 6 weeks goes by with nothing going on? Then he's paid you so much money, what's to stop you from dissapearing, leaving him holding the bag?
Get something going, then hit him up again.
As an alternate, ask him to put the money in trust with his lawyer until something happens.

On the other hand, if he has already said words to the effect that he has no money, then maybe you should bail right away and lein the job.

Next time, when you write your contract, put in specific milestones:
-so much on completion of initial demolition,
-so much on framing
-so much on rough plumbing
-so much on rough electrical
-so much on drywall
-so much on taping
and on and on.
Every two weeks is very vague, subject to all sorts of interpretations, and would be difficult to enforce legally, particularly if not much progress is being made.

ARCS · 01-03-2007, 09:31 AM

What I have to say about people that withhold payments is there are 2 types of homeowners who do this.

The first (and what most customers fall in to) is the person that just wants to ensure their job is done right and called upon you because they wanted a quality job. These people may have been burned by a contractor before or know someone who has. If the job is done right you will be paid promptly at the end and good referrals will follow.

The second is one of the homeowners that knows that contractors never win any battle in court and it is easy to take the contractors payment hostage for either a discount or additional free work. What you need to do is figure out what category this person fits in to and if it is the latter, get out of this project while you still have your pants. Being late on progress payments is just one way these type of people get ahead of you and put themselves in a better position to pry at you.

Just by seeing you state that they were out of money makes me cringe, and from my experience, these are the type of people that are going to try to use what they owe you as leverage to make the project fit in their budget. How does "we owe you 12 grand but all we can pay you is 8,000" sound. This also won't be offered on a day you sent the bill it probably will be a month or so after and at this time you are worried about actually getting anything from these people, so probably will settle with them and out the window goes all your profit and then more. I personally would lay it on the table with them and state that you have bills to pay, and if they can not pay you, you will have to put their project on hold and go work for someone that can pay for a while. When they are able to get caught up you will be back. Most of the time this will have them immediately caught up and keep them on track through the end of it.

Mike Finley · 01-03-2007, 09:42 AM

This should be cut and dry but based upon what you said I think you screwed yourself. If your contract states payments due every 2 weeks, it every 2 weeks. If 14 days go by without a payment he is late, open and shut case. What does your contract say when payments are late?

But if you really did word your contract

Quote:

approximately every two weeks

the use of the word 'approximately' has pretty much screwed you and muddied the waters with ambiquity with was does approximately mean?

If I was your lawyer I would advise you to change your contract and make it as specific as possible. Get rid of approximately, have a place to put in dates, if you do anything and use progress of the actual work to trigger payments either define it as the start of that phase of the work or at worst use verbiage that says you the contractor are to determine when a phase is complete.

For instance we used to use tile installation as a progress date. The contract said simply $2600 due upon installation of tile. Well, to us that meant when all the tile was cut and installed the payment was due. To a couple of customers they thought tile installed meant grouting was done too. It could have been another day delay if someone really split hairs and thought it meant sealed too. We always had the verbiage in their that the contractor determined when it was complete so we never had a problem getting paid. But we did change it over to say "start" of tile installation just to make things simpler.

Anyways, back to your problem if "approximately" is in your contract you are in trouble, if it isn't then it's pretty simple. What exactly does your contract say?

C.C.R. · 01-03-2007, 03:50 PM

Thanks guys, well as you can probably tell I'm fairly new to the whole business end of construction. I'll have to plan a meeting with him and work out our differances. And Mike yes, unfortunatly, my contract does say "approximatly"

I'm not, necessarily, looking to get out of the contract just conduct business like civilized human beings. I've never run into this type of customer and hope I never do again (but I'm sure I probably will) So from what I put together from all your opinions is " suck it up, bite your tongue, and get back to work.

**joasis** · 01-03-2007, 05:56 PM

In the future, put this in blood....on this date you will pay me so much %, and then by this date, so much, and a final on this date. period. Your job should be staged to complete tasks safely in that order, and hopefully, when you get enough work behind you, you can do as some of us do, materials in advance, labor when complete. I rarely split labor, and if I do, it is when their is a large concrete pour...which we get a payment on, the rest when the building is complete.

C.C.R. · 01-05-2007, 02:13 PM

Thanks to all for your insights. I've definatly learned a lesson here. And the guys that replied are the exact ones I was hoping to hear from.

As I said in the past I'm very confident in my building ability but when it comes to the business end I'm like a monkey humping a pineapple. But I'm learning. Every sitituation is a lesson (sometimes an expensive one). I'm looking on line now for a good contract form that I can just plug my info into. Any suggestions?
Thanks for the help
Rog

dirt diggler · 01-15-2007, 05:52 PM

Quote:

Originally Posted by C.C.R.

I've posted many times about this particular job recently. The customer is acting as his own G.C. When we signed the contract I had made up a payment schedule, I gave him a couple of options, The one he chose (and signed) said, "$ Xxxx.xx approximatly every two weeks". Now there has been the usual construction delays, waiting for materials, waiting for other trades, plus the holidays. He already was a week late with one payment I had to verbaly ask where is my check his answer was " Oh I was going to hold it for another week because of progress" (What happened was I had to bounce back and forth between sheetrock and T&G pine so the electrician and plumber could fix there mistakes.) The last invoice I gave him was on 12/14/06 I talked to him on 12/23/06 and he said he would call me on the 26th with a partial payment (due to not having any money) (Yes I try to be as accomodating as possible for my clients, sometimes a little too accomodating.) Finaly my question is the payment schedule that was signed and dated by him was on a bi-weekly basis with him holding the last payment until project was complete. It's not based on how much work is done. By not living up to the payment schedule, did he break the contract? Any insight would be greatly appreciated

I'd change your payment scheduling. Base it off of work completed in phases/tasks

Honestly, I wouldn't have signed your contract for that simple reason ---- b/c technically (while you're a good guy I'm sure) you could just sit back and collect checks and not do anything.

Did he break the contract?? Technically, yes. But if you're running into delays, etc. --- you're not exactly setting the world on fire as far as getting the job done. Yeah, there's delays.

Really, I'd start getting some work done. Make this project a good one ... And then change your payment methods in the future.