THE CONTRACT: A GOOD THING
By Stuart Baker and Jeffrey Oppenheim
A contract is often seen as the enemy, when, in fact, a properly drawn contract can be your friend.
The typical dry contract that has a lot of boilerplate legalese and penalty clauses does little to help construction relationships. Such contracts actually hurt the intention and atmosphere of cooperative projects.
Contracts should not pit parties against each other. They should be written clearly and simply to protect both parties. The reality is that well-written contracts serve to clarify the work to be done, and perhaps not to be done. They outline who is responsible for certain components and how to handle change orders. They set a realistic time frame. In addition, they can serve as a record to remind the parties involved about all the agreed-upon details.
There are plenty of contractors and people in the trades who shun contracts. They might be intimidated by them or simply feel they are unnecessary. Some contractors have operated for years without contracts—without incident—but this is not recommended. The best intentions can be lost half a year later with conflicting memories of conversations. A good, simple contract can eliminate doubt.
So what should be the makeup of a good construction contract? Above all, it should be clear, thorough in detail and to the point. First of all, include the name(s) of the customer, note the date, and reference the contract to dated plans, blueprints and specifications.
State with as much clarity as you can what work is to be done. Be specific. Don’t just say “will provide shelving.” Instead, say something like “will provide five adjustable 1- by 10-foot red oak shelves finished with three coats of oil-based polyurethane.”
It may be helpful for the clarification of specifications to list the work to be done in the order that it actually follows on the job. For example, start with engineering, then site work, then foundation, then frame and so on. It is useful to number the individual categories.
Another useful document, if the job is large enough, is a specification booklet that notes in detail the physical components of the job. For example, note that the foundation will be 8 inches thick on a spread footing and that the concrete will be 3,000 pounds per square inch. Note the R-values of insulation and what type of insulation will be used. Again, be thorough with details and to the point. You may create your own spec booklet or perhaps find a generic one. Regardless, tailor the specification information to the particular job.
A good contract should include a realistic schedule, as noted earlier. Unless you are knowingly entering into a time-sensitive agreement, beware of being too optimistic about time frames. Allow yourself reasonable time for completion of the project.
The signed contract should also include any relevant documents, such as a payment schedule. Be sure that all documents and attachments are signed or initialed and dated by the principal contractor and the clients or their agent. Half a year down the road, it is easy to forget just when things were agreed upon, and, perhaps, all of what was included.
A construction contract should also include a provision for dispute resolution. Pursue mediation first in the event that the key parties cannot work out an agreement on their own regarding a dispute. It is almost unheard of not to have some sort of tension or dispute during a construction project. How positively you deal with it is very important in the resolution of any conflict or tension.
The spirit or tone of a contract, and of the construction relationship itself, is often overlooked or at least undervalued. If you enter into a contract with distrust, too much self-protection and less than full honesty, you are already setting the stage for disappointment and perhaps excessive conflict. If, instead, you enter into a contract in the spirit of cooperation and partnership, you are setting the stage for deeper, healthier relationships associated with your work. The work will tend to go better. It will be easier to address challenges and the beginnings of conflict.
We have seen too many contracts that are clearly geared heavily toward self-protection, as if the parties involved expect to be abused and taken advantage of. This is an unfortunate approach. Without being naïve, you can structure the contract to expect a good working relationship. This approach will likely lead to one. You will enjoy yourself much more if you are working in this spirit. You can relax and not focus on who seems to have the upper hand.
In short, a good contract is a wise thing to have. It should be detailed in a factual way. It should reference all relevant documents. It should include a cooperative way of approaching dispute resolution. And it should be written and signed in a positive spirit. Executed in this fashion, a good contract can be an ally for all involved.
Stuart Baker has been a Falmouth-based builder/remodeler since 1980. These days he focuses on mediation and related consulting work through his business, Creative Contractors Corp. He can be reached at 508-548-4791 or stuartbaker1@msn.com. Jeffrey Oppenheim, Esq., has practiced law in Falmouth for more than 25 years, specializing in real estate, zoning issues and business law. Representing both general contractors and homeowners, he is a mediator in the Falmouth and Barnstable courts. He can be reached at 508-548-8255 or at jwoppenheim@aol.com.
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