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downloadThe jailhouse lawyer is a colloquial term for an inmate who is studied in law and can help others as well as themselves navigate the legal system. Unlike lawyers who train their understanding of law for profit, jailhouse lawyers are a product of necessity.

As a contractor you will need to be a jailhouse lawyer of sorts. Caged in by ever increasing laws your very survival will depend on the gritty everyday transactions of the business world.

 

Welcome to Jailhouse Lawyer 101- Contract Basics

 

1) No Contract? No payment!

Always get a signed agreement with new customers. Most of the time you won’t need it, but when you do need it…you really, really need it because the customer doesn’t wan’t to pay. Quantum Meruit may allow for you to recover some money but its a serious inconvenience to argue for money you have already earned. Presenting a professional and serious attitude towards legal matters is the best way of preventing anything from coming up in the first place.

2) Vague contracts favor the customer

You offer a contract to the customer. The ball is in your court to make the proposal as clear as possible and this is your opportunity. A judge or arbitrator will favor the customer/offeree in a dispute involving vague contract terms. Likewise your proposal & contract will override any unverifiable casual negotiations made during the project if it’s prepared correctly.

3) In order to file a lien you contract must meet certain requirements!

A contractor can file a lien. But what is a lien? Its a securitized interest in a real property. It a public and legal recognition that you may have  a legal claim and this property may be held as collateral until the claim is resolved. You take action through a lawsuit but the lien is the collateral you are holding. But in order to make a lien enforceable or “perfect” a lien your contract must meet legal requirements. Always meet every requirement in your states business or professional code concerning your contract. These requirements will assure that you can secure the collateral from the owner.

4) You are always negotiating

Be careful of casual negotiations. If you cash a check with the words final payment a court can decide that you are indeed 100% payed in full whether its true or not. If a customer records you agreeing to something verbally  that is vague in the original contract they can hold that against you. Some customers may slip in extra work requests through an email that you agree too without scrutinizing and then hold you responsible.

5) Use standardized contract language.

Standardized contract language has predictable results. For example the term “substantial completion” is used throughout the construction industry in lieu of completion when defining payment terms. Because if you customer owes you $50,000 dollars and you owe them a broken $10 flower pot from ikea on 3 week back order that word “substantial” makes all the difference. Not only will it prevent common issues but using standardized language allows you to review previous legal disputes where the exact same contract language was used in order to assess how you will be affected now.

6) Describe Customer Performance

Remember that each party has to meet certain requirements to fulfill their contractual obligations. You should be requiring more than money from your customer. The contract should also spell out the performance of the customer on the following; supply of water and power, job site access, removal of pets or livestock, moving and storage of furniture or equipment, timely change order reviews and penalty for temporary demobilization at owner request.

 

This is a small list and I recommend further study or consulting an attorney on these issues. I am bringing them to your attention so that you can consider them before it’s too late. Often we find ourselves dealing with pleasant and helpful customers so often we become complacent. But complacency is unacceptable as well as costly.

Looking for a pre-formatted contract?

There are two options;

1) The American Institute of Architects (AIA) has a great set of very well established contracts. However these are very large and complicated. They are suited for large business to business dealings.

2) Under the products page we sell the California Contract Outline. It is a simple contract you can insert your business information into. It meets all state requirements for homeowners and business to business use. It has clauses concerning all these issues which you can simply delete or leave in place based on their relevance to the job you are bidding.

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