The Devil’s In the Details | What is an Effective Contractor for Contractors & Home Remodelers – Ask Clay Anything

Show Notes

Wes Carter, attorney at Law with Winters and King answers the question from a Thriver in Michigan, “What does an effective contract for contractors look like?”

1. Clarity about all specifics
   1. A lot of people try to be short and sweet with contracts and that is dangerous.
   2. If you have legitimate costs that come up that are not expected, you have to be able to anticipate that. 
   3. Usually, there are many parties who sign off on the contract including the bank and contractor.
   4. You should state the phases of your project and when those will be completed.
   5. The language should avoid final approval language because there are people who are never happy
   6. On the contract
      1. Name of the corporation (Not your personal name)
      2. Business street address
   7. The American Institute of Architects determines whether or not a contract is good
   8. Not having a tight contract will cost you more than paying around $1,000 to get a contract.
2. Defined pricing
   1. How much and when
3. Defined liabilities
   1. Limitation of liabilities
      1. There are many types of damages and you have to put a cap or a limit on the things you can and can’t be sued for
   2. Warranties
      1. Factory warranties
      2. Workmanship
      3. Warranty type and length
4. Defined job start date
   1. All of your other dates will be affected by this first date
5. Insurance clarification
6. Street address for the business
7. Exhibits
   1. When you reference specific plans that the customer reviews and initials off on the documents.
8. In law, severability (sometimes known as salvatorius, from Latin) refers to a provision in a contract which states that if parts of the contract are held to be illegal or otherwise unenforceable, the remainder of the contract should still apply.
   1. If I make a 20-page contract and later a court says that a specific part of the contract that is deemed illegal and thrown out, the whole contract will be thrown out if you don’t have severability.
9. Defined the completion date
   1. There may be a divorce and you have to be proactive about that