Verbage For Accepting Credit Cards

OPAL

Hi. I am in the process of updating our contracts for the upcoming 2009 exterior remodeling season. Based on a little bit more experience from 2008 I find it necessary to add a little more clarity to our contract on the payment issue. I am going to add a "Payment due by" clause....I had about 3 customers that "went on vacation" right when their job was completed and my salesmen were given the run around for up to 3 weeks while the HO was away. I even had a HO get upset with our company for calling and sending a collection letter. The HO did not let us know that they had a planned vacation at the contract signing time.

I digress...
I am going to add a clause that specifies something to the effect ..."Final payment due on job completiond day or no later that 5 business days after job completion"

1) Does anyone have a smoother way of stating this.

And....although I have run this by my lawyer I am still not clear on what I can put for the penalties or interest if final payment is not recieved in time frame stated.

2) What are you guys using as far as credit card acceptance verbage. How can I get it in writing that credit cards and financing are at a 4% job cost increase?


THANKS for all your thoughts!!!

SelfContract

Do not accept cards in multiple installment/payments per order. First-time charge only.

If you charge 1st time successful, then the customer file bankruptcy on all cards after that, ... then second time (next week for example) the card will be denied on you. So be very careful! Good luck.

GregS

When doing your contract, show a price for paying cash/cheque, and one for paying with a credit card (higher by the amount your 'discount' rate is).

Also state that outstanding balances will be charged at a rate of x% per month compounded. And I like Stone Mountains clause to the effect of "Payments delayed beyond 10 days will void all warranties"

Tiger

Payment is due at time of service seems to say what you need. 30 days is so standard that nobody will enforce payment before then. I just look at it in the future knowing Client A pays at time of service and Client B pays after 30 days. Who do you think I go to first?

I'm not sure it's legal to add a fee for the credit card expense. Credit card companies are against it. Easier to throw the annual expense into overhead.

scuba

Here in Ca it's illegal to charge someone extra if they want to pay with a credit card. But, you can reverse it and offer a discount if paid in cash or check.

Greg

pcplumber

Since the terms change for each contract, we write the terms below the scope of the work. Writing this with the scope of the work has a more powerful psychological effect than embodied in the contract. We also write the terms on specification sheets.

This is what we hand-write in every contract:

TERMS - Contract price with all discounts reduced to $4400 - down payment upon completion $2000 - balance of $2400 payable in 24 monthly payments of $100 with no interest providing payments are made according to the terms in the contract - otherwise if any payment is over 30 days late the customer agrees to pay Bestline a monthly service charge of 1-1/2% on the entire balance of the contract until the contract is paid in full, plus collection costs and attorney fees, and Bestline may demand payment in full. Since, Bestline is not securing this loan with a Trust Deed, should any payment be over 30 days late, Bestline may record a California Mechanic's Lien on the property, throughout the duration of this contract until the contract is paid in full, and a Mechanic's Lien will only be filed if any payment is over 30 days late.

I believe you can void a warranty if the customer does not pay for that portion of the work, but I don't believe you can void a warranty just because a customer pays late.

We use a program with a template for writing all our contracts so all we need to do is change a few numbers.

What part of 'PAYMENT DUE UPON COMPLETION' does the customer not understand. This means 'immediately' and we don't let our customers slide for more than a few days unless we are positive they are transferring money. In a very nice way, we urge the customer to pay faster by telling them that we do not pay the laborers, suppliers, etc. until after the customer pays us. This makes the customer understand that they will be making many people angry if they don't cough up some money fast.

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Ed the Roofer

I have some "Automatic Discounts" calculated into my final contract price, available only if paid per the precise terms of the contract payment schedule.

If they do not pay according to the contractual schedule, all discounts and warranties become Null and Void.

It light a fire under their azz to pay on time and provides a substantial enough additional premium for me to make it worthwhile to follow through with the mechanics lien and lawsuit if necessary.

PCplumber,

You can Not SPIKE the Lien date by allowing the length of the payment terms be a condition for a lien. The lien clock starts upon the last day worked on the job. Also, you can not artificially provide some meaningless work months down the road, just to extend the time period of determining when the actual last day worked on the job was.

But, who else would know that? If it works as an intimidation tactic to get paid, then so be it. But also, you should make sure that your contracts al have a "Severance" or "Clearing" Clause, so that one illegal clause does not make all of the other clauses unenforceable.

Ed

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firemike

Same in Michigan. You can't charge someone more to use a credit card, but you can give a discount for cash. You add (build in) the 3% or whatever to your proposal price at the time the job is started, and if they want to pay cash, deduct 3% at the end.

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Ed the Roofer

That is not just State rules, but the compliance terms of the contract with the merchant account provider. But, I don't think it is rigidly enforced.

Ed

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GregS

Correct, this is what I was trying to state.. Show a discounted price for cash/cheque. Same rules apply here with merchant accounts. Things like this are done often, mostly in computer shops where margins are small single digits. They just have a sign showing "Price, and cash discounted price"

pcplumber

You are right. These are called tort clauses (I think) where you write something to scare the customer and you know the clauses won't hold water.

We had a thread, several months ago, where I mentioned I lien every customer's home when they are late on a payment and I never had a legal issue. Not one customer has challenged a lien that was filed late. It is not against the law to file a lien late. Although, my attorney said I could end up paying a customer's attorney's fees to force me to remove the lien. Wouldn't it be better just to pay me. I get paid on about 80% of the jobs I file liens on. Some people croak and some just don't have the money.

These are two new clauses I am putting in my next contract. I've been wanting these two clauses for several years.

The first clause legally gives me the right to charge my customer attorney fees just for back-talking.

CLAUSE 1

"If any situation arises out of this contract wherein Bestline reasonably feels the need to consult legal counsel, Bestline shall be entitled to be compensated for all of the reasonable costs of the legal consultation regardless of whether or not litigation or arbitration is initiated.

If either party becomes involved in litigation arising out of this contract or the performance thereof, the court in such litigation, or and separate suit, shall award reasonable costs and expenses, including attorney fees, to the prevailing party. In awarding attorney fees, the court shall not be bound by and court fee schedule, but shall, if it is in the interest of justice to do so, award the full amount of costs, expenses, and attorney fees paid or incurred in good faith."

CLAUSE 2

This clause was written so I can still file a lawsuit against a person who signs a contract with terms for payment and knowingly intends to file bankruptcy in the near future. I've had a few of those.

"Buyer specifically realizes and recognizes that Bestline enters into this agreement with the expectation that it will be paid in accordance with the payment schedule set forth herein above. Accordingly, Buyer specifically represents to Bestline that the Buyer is currently financially solvent, and that Buyer has no knowledge, whatsoever, of any current situation of combination of situations which might result in the owner having to file for bankruptcy protection within the next two years. Buyer makes this representation to Bestline with the expectation and intent that Bestline will rely upon the representation in agreeing to undertake the work envisioned herein, and in the absence of such representation, Bestline would not enter into this agreement."

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pcplumber

Posted a 2nd time by mistake. Don't know how I did that!

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Mike Finley

I always find wording like this kind of funny. Basically you are saying payment is due 5 days after job completion.

I've ran into this with other landlords when we talk about leases and when rent is due, they ask me how long the grace period is that I use and I have to laugh, and tell them there is no grace period, the rent is due on the 1st. If you say you have until the 5th then that means the rent will always be paid on the 5th.

OPAL

Thank you all for your input. I know we have all had experiences with late pays....and I wanted to add all the verbage I can to precisely get to the payment due point!

I should have worded my Q better....as I know full and well that we cannot charge more for accepting CC. I must simply get my salesmen better at increasing the estimate price by X% and offer the "cash discount". They get used to offering a "no negotiation job cost" unless HO wants to remove an item fromthe contract.....and then it leaves us 3-4% behind when they hold out their CC (your right....not a huge deal....but still a cost I would like to see incorperated into job estimate)

I have not had to deal with Liens (yet, knock on wood)....and all the verbage you provided help me nail down the terms!

I am all ears if there are more terms you all add to your contracts.....

hahaha.....I should put a weather clause in my contract. Amazing how HO forget that exterior remodeling is weather dependant!

OPAL

Does any one have this included in their contracts? It sounds ify!

pcplumber

If you have the arbitration clause you have the option to go to arbitration or court because usually the homeowner always runs to the court first.

There is a major problem with arbitration through the BBB, or maybe all California because now with the BBB we cannot sue for attorney fees.

We used arbitration one time when a customer filed in small claims court, the judge saw the arbitration clause, threw out the case, and we took the customer to arbitration, with an attorney, and we won. I like arbitration much better because usually the homeowner will not hire an attorney, we will, and we get to talk for as many hours as it takes, while a court judge rushes the case.

If you use arbitration in California the notice of arbitration must be on the face of the contract, the statement can be inside the contract, and the customer must initial the clause agreeing to arbitration when the contract is signed.

One major problem we had with arbitration is the BBB refuses to arbitrate many different cases and they don't seem to want to be bothered with very small matters because they have to pay an attorney, or someone else to arbitrate your cases, so it is often easier to just file a small claims action.

Incidentally, we do have a 'weather clause' in our contract.

5. COMMENCEMENT OF WORK Bestline agrees to commence work and adhere to the schedule as indicated in the contract. However, Bestline will not be responsible for delays beyond their control or for any of the following: (a) failure of the issuance of all necessary building permits within a reasonable length of time, (b) disbursement of funds into a joint control or escrow, (c) acts of negligence of omission of the buyer, or buyer's employee, or buyer's agent, (d) acts of God, (e) stormy or inclement weather, (f) strikes, boycotts, lockouts, or other labor union activities, (g) extra work ordered by the buyer, (h) inability to secure materials through regular channels, (i) imposition of government priority or allocation of work ordered by the buyer, (j) failure of the buyer to make payments when due, (k) delays caused by inspection or changes ordered by inspectors or the authorized government bodies, (l) facts of independent contractor, holidays, or other causes beyond Bestline's control. Bestline will not compensate nor reimburse buyer for wages they may claim to lose due to rescheduling or failure to complete the job by the scheduled date.

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Island1

We set up all our contracts to say final payment due upon receipt of a passed final inspection. "Job Completion" gets you no where in court if you ever have to go. It's a subjective term, which the HO will argue "the job isn't complete". I learned this the hard way.