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Commercial construction
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Discussion Starter #1 (Edited)
I know that every state is different, but what constitutes a "legal contract" as opposed to an "illegal contract" in most states? Many contractors in N.Y. have been accused by the Attorney General of using illegal contracts.

Do you believe that MOST contracts are illegal?

What are the main differences between proposals, agreements, and contracts?

Does anybody have a good contract for a Construction Manager who is "not at risk" as far as a guaranteed maximum price is concerned?
 

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General Contractor
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I would say most contracts have some portion that could be considered illegal (depending on who is ruling). That may be the issue in NY - some key points of the contract are not legally enforceable with current law (I'm guessing of course as I don't know NY law).
IMO a proposal is similar to an estimate. You are proposing to perform work for the price set forth. In some instances (smaller contractors) they put the contract on the back - so in that instance I would say it becomes a contract. On the other hand the argument can be made that a proposal is also a contract - by providing the proposal you "assumed" you had a chance to get the job and therefore if you are selected you are bound to perform the work. There are ways around that with some legalese (fine print). An agreement and contract are the same thing in my way of thinking. One thing a contract needs to be legally enforceable is consideration to both parties - both agreements and contracts provide that.
 

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Commercial construction
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Discussion Starter #4 (Edited)
...One thing a contract needs to be legally enforceable is consideration to both parties...
That, I think, is the sticking point with most of the contracts that I have seen. Contractors seem to think that they can put anything into a contract, and that the Owner HAS to live up to it.

Thanks for the link Rich, I'll order one and look it over.
 

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A contract is nothing more than an agreement between two parties.
An 'illegal' contract would be one in which one of the parties has signed for something that they, knowingly, could not deliver. Touchy and difficult, been there.
 

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Commercial construction
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Discussion Starter #6
I've had VERY few disputes in my whole life, that makes me very inexperienced. I've had the same lawyer for 20 years. So far we've only been to traffic court together. Sooner or later, my luck is bound to run out...
 

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hatchet said:
I would say most contracts have some portion that could be considered illegal (depending on who is ruling). That may be the issue in NY - some key points of the contract are not legally enforceable with current law
This is exactly what I've seen cited is such cases. Most instances have to do with "consumer" law more so than construction law. The most widely cited "illegalities" include:
- failure to disclose to a homeowner their right to rescind acceptance of an Agreement within a given statutory time frame
- inclusion of contract conditions that compel a consumer to surrender rights to persue various legal remedies for damages or non-performance.

Let's face it, the world of home improvement contracting is far removed from that of new, commercial, general contracting. Having reviewed, amended and ratified a good many commercial subcontracts, I consider most of the 'boilerplate' agreements presented by home improvement contractors, frankly, a joke. Rarely do such agreements provide the homeowner any assurance of a timely completion much less provide for requirements as basic as the provision of insurance. The agreements I've seen are ridiculously "one wayed".
IMO, the combination of uninformed purchasers and a virtually self-inspected work environment (bar the cursory inspections performed by local govts) makes the home improvement contracting industry a breeding ground for the kind of outrageous stories of 'rip-off' that grace TV news all too often.

Some of you may remember my post of some months ago ( http://www.contractortalk.com/showthread.php?t=1596 ) regarding my brother's troubles with his HI contractor. Update - his 9 x 14 solarium, (started in Octoberr? after 5 months of contractor foot dragging) still isn't finished. After securing a lawyer he compelled the contractor to amend the agreement to include a schedule for completion (extremely conservative) and provision of liquidated damages (extremely modest). Today, at the advice of his attorney, he agreed to waive any further application of LD's for fear that the contractor, now about 95% complete and in its 23rd day of LD's, will decide to forego completion. Some 'professional', huh?
 

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mikesewell said:
Sooner or later, my luck is bound to run out...
That's no more 'luck' than hope is a method. Good work :Thumbs:
 

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Commercial construction
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Discussion Starter #9
PipeGuy said:
That's no more 'luck' than hope is a method. Good work :Thumbs:
Thank you. I am very careful about choosing my customers, and very careful about choosing my jobs. There is no substitute for being perceptive, and in my opinion, there is a big difference between being a salesman and being a businessman. It is surprisingly easy to sell a job that, in the end, will you make you sorry that you were born.

...I consider most of the 'boilerplate' agreements presented by home improvement contractors, frankly, a joke. The agreements I've seen are ridiculously "one wayed"...
THAT'S what I was looking for. I'm no lawyer by any stretch, but I agree with you here. Most of these agreements are nothing more than a bluff, and when the bluff is called, the contractor can find himself on the evening news.

Some of you may remember my post of some months ago regarding my brother's troubles with his HI contractor.
I've seen several engineers, and construction inspectors who have spent their whole lives reviewing contracts on multimillion dollar jobs, get SO screwed by small home improvement contractors.
 

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PipeGuy said:
I consider most of the 'boilerplate' agreements presented by home improvement contractors, frankly, a joke. Rarely do such agreements provide the homeowner any assurance of a timely completion much less provide for requirements as basic as the provision of insurance. The agreements I've seen are ridiculously "one wayed".
I guess I have always been of the opinion that your contracts should be as 'one wayed' as you can get away with. Contracts are a CYA to me. The contracts protections hopefully will never even ever have to be scrutinized by either party for legal reasons. I think of the terms as something that only will be have to used in a worst case scenario and then even if the wording won't stand up in court there is always the hope that having "something" is better than nothing and will work psychologically enough against the customer to keep them from pursuing a loop-hole. I see the power in this because I believe that if you get sued you have basically already lost even if you win the case.
 

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The state of IL has various requirements which are supposed to be in each and every contract, in addition to a "consumer rights form" which must be signed if the contract is over $1,000. It's funny though, most of the pre-printed legal forms for sale at office max and similiar stores meet these requirements and most contractors in IL that I have spoken with have no idea what a consumer rights form is.
 

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Commercial construction
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Discussion Starter #12
Grumpy said:
...most contractors in IL that I have spoken with have no idea what a consumer rights form is...
It's the part that goes just below their name, in the Attorney General's press release... :cheesygri
 

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Dharma Building
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A contract is, in its most basic form, simply an offer which is accepted. Example, John offers to build a treehouse for Bill for the sum of $ 2,000.00. Bill accepts the offer as stated. Contract. If Bill says no, I want you to build the treehouse, but I will only pay $ 1500.00, Bill has not accepted John's offer, but has made a new offer to John to pay him $ 1500.00 to build a treehouse. If John accepts the new terms, they have a contract. Be careful with proposals. Unless the proposal clearly states that it is an estimate, and not an offer to perform the work for the amount stated, it could be construed as an offer which, if accepted, creates a binding contract. The essence of a contract is a meeting of the minds between the parties. The terms of a contract can be almost anything so long as they do not require the commission of a crime and the parties are in agreement. All that being said, Grumpy is correct in that there are a number of consumer protection statutes that impose certain restrictions on the form and substance of contracts. The specifics vary from state to state and generally involve disclosure requirements (particularly with regard to financing), rights of cancellation, etc. Another issue is the distinction between the "legality" of a contract and its enforcability. A contract to off your mother-in-law is illegal and unenforcable. A contract which has a term that is illegal, may still be enforcable. One solution, if in doubt, is to include a savings clause that the contract will not be rendered unenforcable by reason of the illegality of one of its provisions - fairly standard.

There are significant differences from state to state as to statutory requirements. Best advice is to find a form that you like, and then have it reviewed by your attorney for compliance with your state's specific requirements in that regard.
 

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Craig, To what extent, if any, would this clause, offered in your locale, afford a contractor the ability to avoid entering into a contract he was otherwise to busy to do?
"Performance is contingent upon the ratification of a mutually acceptable Subcontract Agreement and the availability of [the company's] forces."
 

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Dharma Building
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Pipe,

Don't know without doing some research. On the face of it, I think you may be asking the wrong question. The purpose of the clause appears to be to permit the contractor to avoid performance of a contract already entered into in the event that subs are not available. That is, the clause assumes the existence of a valid, binding contract. If the subs are known not to be available prior to entering into the contract - don't.
 

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Craig said:
If John accepts the new terms, they have a contract. Be careful with proposals. Unless the proposal clearly states that it is an estimate, and not an offer to perform the work for the amount stated, it could be construed as an offer which, if accepted, creates a binding contract.
Wondering how effective it would be to actually inforce the contract if contractor says, yes we have a contract but I won't be able to start your job till 2015. I guess then it becomes a case for suing for specific performance?
 
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