The devil is in the details
The devil is in the details
Contracts come in many forms and most of us are so numb to them we sign without reading the details. I was exposed to the elaborate nature of contracts while working in South America back in my O&G days. When things are going well we never need to worry about those details; it is when things turn south that the details matter.
I got my first real experience with contracts 5 years ago when a client canceled a check for work performed. It was at that time I realized he did not sign the contract. I accepted his initial payment, and the single party signature on the contract was mine. I was in a world of trouble. This turned out to be a very expensive lesson.
The average homeowner may never have this experience, but if there is a natural disaster, the contract that will come into play is the one with the insurance company. If you have never read through one, the wording is scary and not at all in favor of the homeowner. Having worked in post disaster rebuilds I became very familiar with the insurance process of paying out claims and the shock from homeowners when they receive what they think is the money to rebuild their homes. My suggestion to everyone reading this is to take pictures of your home as it is today. Save these photos. They will build the case to recuperate your losses.
Contracts are even more viscous in commercial construction; they can be outright punitive. I want to highlight the Triple Net Lease contract. I want to particularly highlight the repairs/maintenance clause in the contract. I did work for a client that had a water leak for years. When it was discovered, the client sought recovery from the landlord to no avail. One of the terms in the rental contract was maintenance, and the water leak was designated a maintenance issue. This experience highlights the importance of having an experienced party look over the building prior to signing the contract.
Contracts are designed to create an amicable resolution in the case of a problem. I have read quite a few books in contract negotiation, the best one being Getting to Yes. The biggest takeaway from the book goes like this–in a good negotiation, both parties end up feeling a bit resentful. If one ends up really happy the other party got screwed. Negotiations should always happen before starting a project; not at the end when the money is tight. Learning the ins and outs of contracts helps me to deliver a better overall experience in what most people view as their largest investment.
I have also seen the negative side of contracts or lack of contracts used on trades in an attempt to not pay the agreed amount. Construction is a risky endeavor. I can’t tell you how many stories I have heard and can’t begin to tell about how homeowners want to negotiate the final payment. In the end, this tension that comes from wondering if you will get paid for work performed only causes prices to be elevated.
