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The Importance of a Strong Contract
“My customer won’t pay my final bill for the labor and materials I put into this project”.
"My customer asked me to do all kinds of little extras. They add up. I suggested that we
do a change order, but my customer told me not to worry about it. We could square it away
later."
Sound familiar?
The problem is not (usually) that the customer wants to cheat the contractor. Instead,
often the problem is that the customer is unclear about exactly what services are (and
are not) included in the price of the project. This is where having a strong contract
is critical. A strong contract sets the ground rules for how the parties work together.
The language should be specific but flexible. It should contain a reasonably detailed
list of the labor and materials to be supplied by the contractor and indicate the cost
of each item or stage of the work. It should also say exactly what the customer needs
to provide to the contractor so the contractor can perform the work, including very
specific payment provisions. If either party wants to make changes in the deal along
the way, the parties should be able to point to language in the contract that tells them
the exact process for making those changes in writing. Most importantly, the contract
needs to explain what happens if a party does not live up to their side of the agreement.
A strong contract does not have to be 15 pages long or be printed in type so small you
need a magnifying glass to read it. It does not have to make your customers shy away
from working with you. To the contrary, a well-written contract is clear and concise
and gives both the contractor and the customer reassurance that the other party knows
the rules going into a job.
Unfortunately, contractors too often are not fully paid for the work they do for clients.
The good news is that there is something that can be done about it. A strong contract
won’t guarantee that every customer will pay you in full the day the job is finished.
What a strong contract will do, if properly enforced, is make it clear when that when
payment isn’t made, both parties know exactly why.
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