One of our readers sent this question:

One large longstanding and reputable company uses a plan with specifications instead of a contract. I’m sure there are pros and cons to each. What are your thoughts on just having a plan with work to be performed, pricing, payment and minor terms and conditions with an acceptance signature line?

I could write a book, and have thought about doing just that, on the issue of writing good contracts. As an arbitrator and as an expert witness, I can say without hesitation that a large majority of cases I’ve worked on could have been prevented, and should have been prevented, with a well written contract.

By coincidence, I received the latest issue of INC. magazine recently, it includes an article by Norm Brodsky titled, “Not So Fast”. He says shortcuts are always tempting, but sometimes it’s better to take the long way around. I agree, especially regarding contracts.

Without knowing exactly what the company does, I can’t comment too far, but my question would be, why? Why would a company that has a good reputation and has been around a while want to do things different? What are they trying to accomplish?

On the surface it looks like the owner is trying to simplify the contract process and make it easier for the customer to buy. Having just a plan with all the job specifications and schedules on it would be faster to put together. Why write pages of text when a well constructed set of plans tells everything they need to know? And, with a minor set of well written terms and conditions, and acceptance signature lines with dates, what more do the parties need? If the job is built according to the plans, there shouldn’t be anything to fight about.

But let’s look at it from a legal standpoint.

What would a judge, especially one who might be bent on protecting the innocent buying public, think of the way you’re conducting business? That’s what you need to be concerned with.

You are doing a job for a customer. They get upset about something and tell you to get off their property, you’re fired. Stuff happens.

They go to their attorney whose first request is for a copy of all the paperwork for the job, especially the contract. When the client produces a set of plans, a set of minor terms and conditions and a signature line, where do you think the attorney will go with it? Their first step is to look for any state or local law that mandates a certain amount of paperwork for any agreement between a contractor and a building owner, like the federally required Right of Recession. If everything is not according to the law, boom, they’ve already won.

Suppose you covered all the state or local laws and this ends up in front of a judge. Remember, most judges know little or nothing about construction.

What do they usually see come across their desk in the way of construction lawsuits? Almost all of them are large commercial jobs with many, many dollars involved. Accordingly, many of those jobs were built using AIA or other documentation that the judge has seen before. Because they’ve seen it, they believe that level of documentation is the norm and should be used by every contractor. It isn’t, but they don’t know any better.

Now they want to know why you, the professional who should have known better, didn’t furnish a better set of documents outlining how and why the job is or was to be built. Obviously, that’s why you and the innocent, trusting homeowner are now in the courtroom. As I’ve said many times, when it comes to lawsuits, you’re guilty until you prove yourself innocent. If you don’t have the proper paperwork, you just made it harder to prove.

I’m not saying you should use AIA documentation. In fact, I recommend against it as those contracts were written primarily by attorneys hired by architects to protect the architect. Those contracts don’t look out for the contractor.

I’m saying you need to write a detailed contract that states everything you’re going to do, and covers more than just the legalities for your place of business. A professional, detailed contract also gives your client the comfort that you know what you’re doing, and they know what you’re going to do.

Approach your business in a business-like manner, because that’s what is expected of you. Your risk is too great to try to be different. Conduct business in the manner that’s expected by the folks looking over your shoulder, ie, judges, attorneys, inspectors, etc.

Sales pitch – it doesn’t need to take hours to write a contract. We offer a simple-to-use contract writing software program, the Fast Track Proposal Writer. You can write a detailed contract quickly, and it will keep you focused on sales, not solving problems.

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