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How Detailed Are Your Contracts?

 
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Old 12-22-2009, 11:41 AM   #1
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How Detailed Are Your Contracts?


Hey Gents

When I sell a job, I have an 8 page legal contract filled out, I also attach a description of work. How detailed does it need to be! It seems some customers will purposely try and read between the lines to try and get more out of you for free. It takes so much time to do up a contract, and to write up an extremely detailed work schedule....

Is there any little tips or tricks any of you can offer? Maybe I need to visit a lawyer and have something drafted up that is more in my favor!

Some customers you just cant please
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Old 12-22-2009, 12:00 PM   #2
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Re: How Detailed Are Your Contracts?


Yeah, visiting a lawyer would be the best way to go. You might find a seminar or class in your area that goes over construction contracts. I went to one recently that was taught by a construction law attorney, he went over everything that should be included in a construction contract. He basically listed out all the clauses that should be in there such as; disputes and remedies, notice to customer, correction of work, warranty, and well there's 16 in the list, I won't list all of them. Of course it will be different where ever you go, so you need to consult that with a local construction law attorney.

One problem though with attorneys trying to explain this, is they don't look at it from a builders point of view. They get too tunnel visioned and focus too much on just the details that need to be in a contract. They don't cover things like when to use what on certain jobs. If I'm doing small work then some things may not apply. If my job is to patch a hole in drywall, I'm not going to write up a ten page contract and include allowances, interest, building codes, and whatever. But with some jobs, yeah you would need to.

I don't have any contracts pre-written up for my jobs. I write them out as I go, but that's something I need to work on is to write up some default contracts specifically suited for the type of work I do.

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Old 12-22-2009, 12:06 PM   #3
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Re: How Detailed Are Your Contracts?


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Originally Posted by healthyhomes View Post
It seems some customers will purposely try and read between the lines to try and get more out of you for free.
defer your SOW to "see addendum plans/specs", make your plans and specifications very detailed, specific and AN ADDENDUM to your contract. Other items in your SOW not outlined/covered in the plans need to include phrases like "including and limited to..."

Last edited by Bone Saw; 12-22-2009 at 12:09 PM.
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Old 12-22-2009, 02:14 PM   #4
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Re: How Detailed Are Your Contracts?


One tip i can give you is to put a general note at the bottom of the contract that states.

"Work only to performed as stated above, any additions or changes to the original contract will be billed or credited accordingly". Define your scope clearly, and highlight the fact that any work outside of said contract will be additionally charged. That is a basic contract writing tip 101, GMOD
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Old 12-22-2009, 02:23 PM   #5
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Re: How Detailed Are Your Contracts?


Here's the headers of the clauses in my 'boilerplate' contract:

01. NON-COMPETE CLAUSE:
02. PERFORMANCE:
03. CONSTRUCTION STANDARDS:
04. MATERIALS AND EQUIPMENT:
05. EXCLUSIONS:
06. JOB SITE WASTE REMOVAL:
07. CHANGE ORDERS:
08. NATIONAL AND LOCAL CODES:
09. FIXTURES AND EQUIPMENT SUPPLIED BY OTHERS:
10. JOB SITE SECURITY:
11. ACCESS TO WORK AREA:
12. WARRANTY:
13. ELECTRICAL CONTRACTOR SHALL NOT BE LIABLE:
14. OWNER/CONTRACTOR DEFAULTS:
15. PERMITS, INSPECTIONS and INSURANCE:
16. TEMPORARY (CONSTRUCTION) POWER AND LIGHTING:
17. OWNER/CONTRACTOR INSURANCE:
18. UNFORESEEN CIRCUMSTANCES:
19. CHANGES AND MODIFICATIONS TO WORK:
20. CESSATION OF WORK:
21. TERMINATION OF CONTRACT:
22. CONFIDENTIALITY AND NON-DISCLOSURE:
23. COMMODITY PRICES:
24. JOB SITE IMAGES, PHOTOGRAPHY AND VIDEO:
25. EXPIRATION OF THIS PROPOSAL:
26. PAYMENT SCHEDULE:

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Old 12-22-2009, 03:57 PM   #6
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Re: How Detailed Are Your Contracts?


Hey Sparky,

would you be able to send me a blank copy of your contract to look at?
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Old 12-22-2009, 07:31 PM   #7
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Re: How Detailed Are Your Contracts?


Very detailed. Length doesn't matter if it's vague, though. If you're leaving room for problems to wiggle through in an 8-page contract, your terms probably aren't absolutely clear.

I suggest you pick up a book called "Managing Construction Contracts" by Robert Gilbreath. It's got some great examples in it and while it's a pretty pricey book (over $100), that's less than you're going to spend to have an attorney draft one for you.

It'll also give you the insight you need to be able to edit your contracts to address new issues.
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Old 12-22-2009, 07:57 PM   #8
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Re: How Detailed Are Your Contracts?


We have around 6 Master versions of contracts, and several variations on each depending on each particular project.

We don't have only one, because as mentioned sometimes you don't need particular clauses/too vague and becomes too much to go through.

I have personally never had an issue with a client arguing the language in my contracts. They are extremely clear.

I don't agree with having a Lawyer write up your contracts. As a GC, you should know what you need. Your contract needs to also comply with the law/statues/regulations. Last thing you want is for your contract to be dismissed/overridden by governing laws.

Don't ever just throw a contract together. Don't ever breeze through the scope of work attached to the contract. Ever. Be very clear and deliberate in the words you choose when describing the scope of work. Always assume that this contract will end up in front of a Mediator/Dispute resolution officer/Judge. Go through your contract enough times that you can't find any loopholes/vague statements.
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Old 12-23-2009, 07:53 PM   #9
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Re: How Detailed Are Your Contracts?


We do larger remodels as well as smaller repair jobs. For smaller projects, generally under $1,000, we only use the signed estimate as our contract. It has 3-4 legal clauses on the end of the proposal. Our estimates, regardless of the size, are extremely detailed and describe the work to be done, how its to be done, what materials are to be used, and what's not included. For this reason, I'm ok with only the proposal on smaller projects. On larger projects, we generally have 10-15 pages in our contract, including the SOW.

I've not yet modified my contract to suit various projects, but it makes sense. I'll add that to my to-do list!
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Old 12-23-2009, 08:47 PM   #10
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Re: How Detailed Are Your Contracts?


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Originally Posted by RemodelGA View Post
We do larger remodels as well as smaller repair jobs. For smaller projects, generally under $1,000, we only use the signed estimate as our contract. It has 3-4 legal clauses on the end of the proposal. Our estimates, regardless of the size, are extremely detailed and describe the work to be done, how its to be done, what materials are to be used, and what's not included. For this reason, I'm ok with only the proposal on smaller projects. On larger projects, we generally have 10-15 pages in our contract, including the SOW.

I've not yet modified my contract to suit various projects, but it makes sense. I'll add that to my to-do list!
A contract is a lot like a lock - It prevents honest people from breaking it! We're like RemodelGA we consider anything under $5k "handyman". Anything above $5k gets the full contract - 8 pages plus SOW.

In 2004 we took a hit for $191k! Spent another $10k trying to collect. So much for contracts!
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Old 12-23-2009, 08:48 PM   #11
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Re: How Detailed Are Your Contracts?


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....... we consider anything under $5k "handyman". Anything above $5k gets the full contract - 8 pages plus SOW. .......!

My breakpoint is just $1k.
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Old 12-23-2009, 08:53 PM   #12
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Re: How Detailed Are Your Contracts?


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Originally Posted by DaVinciRemodel View Post

In 2004 we took a hit for $191k! Spent another $10k trying to collect. So much for contracts!
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Old 12-23-2009, 09:03 PM   #13
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Re: How Detailed Are Your Contracts?


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Just a monthly payment on a $1.8 mil project. We were $1.3 into the project at the time. HO regularly paid on the 31st day after invoice. When we hit the 31st day on a $129k payment - I got a phone call requesting a meeting!

By the 31st day I was $170k into this invoice. No worries - he's going to pay - I got a contract! WRONG!
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Old 12-23-2009, 09:06 PM   #14
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Re: How Detailed Are Your Contracts?


Check out rnoon.com for a contract. There is all sorts of documents on the site as examples. Contacts, change orders, pre-leins, etc. Should help until you can talk with a lawyer. That's what I used to start.
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Old 12-23-2009, 09:09 PM   #15
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Re: How Detailed Are Your Contracts?


OK I feel better now. Apparently he just took the gravy from the project and you are not actually out of pocket that much. But still, that's a hard hit (even for you)!
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Old 12-23-2009, 09:22 PM   #16
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Re: How Detailed Are Your Contracts?


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OK I feel better now. Apparently he just took the gravy from the project and you are not actually out of pocket that much. But still, that's a hard hit (even for you)!
Just gravy... and 18 months worth of my life. And as you and I know - I don't have a year and a half of life to give up.
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Old 12-23-2009, 10:05 PM   #17
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Re: How Detailed Are Your Contracts?


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Just gravy... and 18 months worth of my life. And as you and I know - I don't have a year and a half of life to give up.
OK now I feel bad again.

Maybe you should call in your Chicago mob connections-me, angus, etc

We'll break bread then go take care of business.
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Old 12-23-2009, 11:00 PM   #18
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Re: How Detailed Are Your Contracts?


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OK now I feel bad again.

Maybe you should call in your Chicago mob connections-me, angus, etc

We'll break bread then go take care of business.
So I sould tell them I'm sending RS & Angus over to collect? What should I tell them when they stop laughing?

Look, here's the deal: I have had great success and great failure - that's who I am.

I joined this forum for three reasons:

1. Maybe my 20+ years in this biz could help some of the posters. I'll gloat when I win, I'll cry on your shoulders when I lose. Hopefully someone learns something - one way or the other!

2. Maybe all the experience available here could show me a win or how to prevent a lose. I read them all - win or lose. All the posts mean something to me. I thank all of you for sharing! You're to be applauded

3. I found myself needing to have someone to talk to. My wife and kids have no idea what my day is like. When I spout off about what a great sale I made or what a shi***y day I had - they don't see it from the same point of view as you guys do. Sometimes I have nothing to say but I come for a laugh.

Cheers Comrades!

Happy Holidays.

Nothing but the best to you and your's.

2010 is looking good for us - let me know how I can help make your's the same.

Able and Willing!

P.S. OP do you still need a contract? I paid about $10,000 over the years to have mine developed... In the spirit of Christmas ... send me a PM - I'm not going to share it with all the low-lifes out here!
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Old 12-24-2009, 06:48 PM   #19
 
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Re: How Detailed Are Your Contracts?


If a homeowner wants to sting you more than likely they will. Contract most times are not worth the paper they are written on depending on your bank account your lawyer and the judge.

We have been stung many times both commercial and residential and yes we went to court. HO lost in small claims cried poverty so judge said make monthly payments......yeah right.

GC'S especially bigger ones with lots of money are noted for not paying up there subs, they know you don't have the resources to wait out a court settlement or pay a lawyer.

I remember when Home Depots and Circuit Cities were being built in my area by an out of town GC, many of my buddy’s who bid the sub work and did it right never got there last payment or retain age.....

We all should have contracts and good ones at that but money talks and bullsh**t walks always has and always will....
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Old 12-24-2009, 07:07 PM   #20
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Re: How Detailed Are Your Contracts?


your Construction Association should have a standard contract. We use CCDC-2 and its been argued in court many times

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