Customer Wants Penalties In Contract For Failure To Meet Completion Dates

Mike Finley

Here are some more gems by Michael (graves) Stone to discuss:

Customer wants penalties in contract for failure to meet completion dates

This is all well and good as long as you can put in a bonus clause of equal or more value for finishing the job early.

I once had a fellow tell me that he was going to insist there be a penalty clause of $500 a day for every day that the job ran over the time schedule for his job. Without a second thought, I told him that was fine as long as he was prepared to pay an additional $500 per day for every day we finished the job earlier than the completion date.

His face got red and he said, “No, you will just cut corners to get the job done quicker. I will not sign any contract with a bonus system for early completion.”

I must have been on that sales call all of 30 seconds longer. Fair is fair.

Tom R

That 'Michael Gravestone' knows his stuff!!

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Teetorbilt

I have heard of some big jobs that operated this way. In the small markets that most of us operate in, this doesn't merit discussion.

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Grumpy

Most commercial new construction in my area operates with penalty clauses. It's called "Time is of the Essence."

PipeGuy

There's nothing wrong with accepting any risk as long as you're paid to do so. I for one think it's perfectly reasonable, in most instances, to include a 'drop dead' date. I'd expect to pay for it.

Niner

I'm supplying a job that has a $5000.00 per day liquidated damages clause for not completing the job on time. They do make allowances for rain days, but that's it.

CogentRES

This kind of stuff seems to be in all the amateur real estate invesment books.

I have had many rookie investors try to get me to sign their contract which includes this clause as well as many other anti contractor clauses.

I just look at the person and ask them if they have any idea what they are doing. They usually stumble and say they heard this is how these things are done.

I then tell them we use our forms. My contract is very detailed and includes the aforementioned clause from Markup and Profit.

Grumpy

I have included clauses in my contracts by customers at their request but never any sort of penalty. According to the State of IL, and according to their form that I have to show to every customer, a contract should state a start and completion date.

If I do have to give a guarantee in writing I usually triple my lead time. Instead of 2 weeks, make it 6... I'd never sign a $500 a day penalty though.

carpenter 1st

i actually use a clause with some potentially difficult customers that states if we lose a day of work due to the fault of the customer( no materials , missed payment ,unscheduled interference of subs), that the customer will be charged a full day's work at my extras rate. some will sign it that way . the ones who won't , change their minds when i agree to the reverse.

Mike Finley

That's a good clause, everybody should have something to that effect in your contract. It should be in there for a number of reasons and cicrumstances. - customers supplying products that are incorrect or cause additional work, customers being late if they are meeting you at the job so you can start, ect...

carpenter 1st

yeah, you could say i learned the hard way.

ProWallGuy

Yepper, haven't we all. I've come across more defective wallcoverings in the past 5 years, enoughto cover the freakin Grand Canyon it seems. Nothing worse than setting up, and shutting right back down.

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carpenter 1st

went to start a job recently where the guy had set the block himself. had to wait two weeks for a badly squared square to be completely redone. easiest money i ever made! bought a new guitar with my ill gotten gains!HA,HA!!!!