How to Avoid Legal Problems With Contractors

Written by Posted On Wednesday, 26 October 2005 17:00

As any environmental lawyer is required to do, I often must review contracts between my clients and contractors. They may be for mold remediation, removing a leaking tank, sampling ground water to determine if it is contaminated, and a host of related issues.

A funny thing about contracts is that they seem to be overkill and irrelevant. Until, that is, something goes bad.

When something goes wrong, the only thing that people will talk about is the contract. Which means: the contract better be good.

When there are no problems, no one ever compliments a lawyer on the quality of the contract. But when disaster hits, whether a client is protected or not is based on the quality of the contract. Again, it better be good.

First and foremost: look at the "scope of work" being promised by the contractor. This is the place where the contractor states what he or she will do for the homeowner, and often what he or she will not do for the homeowner. Without question, most disputes occur because this part of the contract was not well written.

Did the consultant promise to take 20 groundwater samples and sample each one for MTBE and lead? If so, it must say exactly that in the contract. "Contractor will undertake a reasonable number of samples and test for appropriate parameters" does not say that --- and don’t allow a contractor to tell you otherwise.

If it is important and you want to make sure it is going to happen you must, absolutely must, make sure that it is spelled out in its entirety in the contract.

Another issue that is often a source of contention concerns the timing of the project. If the parties agree it will start on Wednesday and continue everyday, with appropriate staffing levels each day until completed, it better say exactly that in the contract. Otherwise, you may have to wait in line.

What happens if the contractor either fails to perform or fails to perform at an acceptable level? You may want to spell out the remedies for default up front so everyone knows what will happen if there is a violation.

Perhaps you will be able to reduce the contract price if the project is more than five days off schedule. Perhaps you can kick the contractor off the site and allow some one else to finish if the contractor fails to get it right after one warning.

As to payment, try to always withhold some payment. Contractors are most motivated to complete a project when you owe them money. If you pay them up front, the motivation may go away.

Some State laws may require a portion of the payment be deferred until completion.

Must a lawyer review the contract? If it is for important work, or if it is an expensive contract, especially one that requires performance over a lengthy time period -- yes. Put another way, if it is important to you, have it reviewed by a lawyer before your sign, not afterwards.

Most contractors are reliable and can be trusted. A good contract does not suggest a lack of trust. It just ensures that everyone is on the same page.

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