What's in Your Contract? What you Need to Include to Protect Your Clients and Your Business

2018-03-07

Just like the popular CapitalOne marketing campaign, "What's in your wallet?" – you want to make sure that your written client agreement doesn't leave you vulnerable. As we talked about in last week's article, the contract is a vital, not-to-be-skipped part of any project.

Start with the basics. Every contract must include:

•   your business name, address and applicable license number;
•   the client's name (individual or business) and mailing address;
•   the jobsite address or legal description;
•   the date the parties entered into the contract;
•   what recourse each party has in the event of a dispute; and
•   signatures by the property owner or legal representative, and you or your representative.

A note on signatures. When signing for your business – be careful. "Business owners (and employees) sometimes omit the context in which they are signing agreements. This can lead to becoming personally liable on a binding contract rather than having the company assume sole responsibility for the deal," warns attorney Mike Young.

Always include your title and your company's name as part of your signature and require the same from your B2B clients. Include verbiage that ensures that signers have the authority to represent their companies.

10 terms recommended for every construction contract, adapted from this Angie's List article:

1. Job description: Detail the project and expectations (who is responsible for what).

2. Start and end dates: Give a framework of time the project should take and outline how and when your team can access the job site. Define acceptable reasons for amending these dates.

3. Payment terms: Relate payment dates to job completion milestones. Clearly state how much of a deposit is required to begin work. Some states limit payments, so determine your state's requirements.

4. Local authorization: Specify which party will secure all necessary regulatory permits for the project. State that work won't begin without required permits and licenses in place.

5. Penalties for missed payment or information: Give yourself options to delay work if payment dates or information (such as customer preferences on materials) are missed, to encourage the client to meet the agreed time frame. Be specific about amounts and clearly define terms.

6. Procedure for change orders: Establish a process for project changes or additions, like requiring signed, written authorization on any changes by both parties.

7. Detailed outline of costs and materials: As discussed in this article, you can attach the itemized list of materials, labor and any other costs you provided in your estimate to the contract. Specify brands, colors, etc., and include warranty information where applicable.

8. Proof of licensure, insurance and bonding: Find out what, if any, trade licenses your client's community requires. Provide proof of insurance and bonding.

9. Termination clause: Clearly state when the client or you can leave the job without penalty (for example, if the client doesn't pay, or if either party fails to adequately communicate.)

10. Other protection: Most homeowners will want you to provide a lien release upon payment.

And finally, don't take our word as the last one on the subject - have your lawyer check over your standard contract to make sure you've dotted all your I's and crossed all your T's to protect your business and your clients.

Have questions? Got a sticky situation with a client? Let us help – we are your partners in the concrete-coating field. Click here to schedule a chat with one of our flooring experts.