# Contractors -- Beware with your contracts !!!



## iron_fist (Jan 15, 2021)

I made a post the other day regarding a customer I was cutting loose after we signed a written contract. I contacted an attorney just to make myself feel better and he assured me I have nothing to worry about ..
Since I had his ear, I asked a bunch of questions and he was nice enough to answer. He also went into how MOST CONTRACTORS have contracts that open them up to consumer fraud lawsuits. These can wreak havoc on a business and can easily bankrupt a company. With consumer fraud, you open yourself up to tens of thousands of dollars in attorney fee's as well as tremble damages ( 3 times the amount of a contract).
what is a consumer fraud violation?
not having the 3 day right to cancel on your contract
not having warranty info on the contract
not having a start and finish date
not itemizing and detailing the scope of work and products you may be using
initiating a change order that isn't in writing and signed by the homeowner. Many guys get nailed on this one. Lets say the contract says dark blue and when the product comes in, its called "medium blue" because the supplier made a mistake. Rather than waste more time on waiting for the arrival, you ask the homeowner if medium blue is ok and they say yes ( verbal ). its seems like a very minor change. ITS NOT.
Lets now say the homeowner is being a prick for some bs reason and trying to avoid paying the final balance and you threaten to take them to court. Sounds logical enough. Well, since you mentioned a lawsuit the homeowner calls an attorney and he asks to see the contract and a bell rings !!! He notices there are violations in the contract such as a lack of a written change order when the color was changed and also no mention of warranties. So now, rather than being on the defensive, the attorney now files a consumer fraud lawsuit against the contractor for $50k as well as attorney fees.
This is how contractors get screwed. They were honest, did the job, and when they don't get paid, they file a lawsuit.
Normally the homeowner has no idea they can sue, its not until they go see an attorney that this can happen.
I cannot stress this enough, man sure your contracts comply with all consumer fraud clauses or else you will get sued. Its not if, its when.
Don't think for a minute a court will care how honest you are and how good your reputation is, it doesn't matter. Don't think that just because you are a small time business or family business an attorney won't come after you, he or she will. Its all about the money and they will try to scare you into settling. They can even try to " pierce the corporate veil" and go after you personally if you shut down your company or bankrupt the company in court.
Do not be complacent with this.


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## wallmaxx (Jun 18, 2007)

This is terrific advice..................excellent! 
Thanks for the reminder to be as prepared for legal issues as possible.


*MOST CONTRACTORS have contracts that open them up to consumer fraud lawsuits. *
*These can wreak havoc on a business and can easily bankrupt a company. 
With consumer fraud, you open yourself up to tens of thousands of dollars in attorney fee's as well as tremble damages (up to 3 times the amount of a contract).

What is a consumer fraud violation?*

*not having the 3 day right to cancel in your contract*
*not having warranty info in the contract*
*not having a start and finish date*
*not itemizing and detailing the scope of work and products you may be using*
*initiating a change order that isn't in writing and signed by the homeowner.*
*
Many guys get nailed on this one. Lets say the contract says dark blue and when the product comes in, its called "medium blue" because the supplier made a mistake. Rather than waste more time on waiting for the arrival, you ask the homeowner if medium blue is ok and they say yes ( verbal ). It seems like a very minor change. IT'S NOT.

Let's now say the homeowner is being a prick for some BS reason and trying to avoid paying the final balance and you threaten to take them to court. 
Sounds logical enough. 
Well, since you mentioned a lawsuit the homeowner calls an attorney and he asks to see the contract and a bell rings !!! 
The customer's lawyer notices there are these violations in the contract such as a lack of a written change order when the color was changed and also no mention of warranties. 
So now, rather than being on the defensive, the customer's attorney now files a consumer fraud lawsuit against the contractor for $50k as well as attorney fees.

This is how contractors get screwed. 

They were honest, did the job, and when they don't get paid, they file a lawsuit.
Normally the homeowner has no idea they can sue, its not until they go see an attorney that this can happen.

I cannot stress this enough, make sure your contracts comply with all consumer fraud clauses or else you will get sued. 
Its not if, its when.

Don't think for a minute a court will care how honest you are and how good your reputation is, it doesn't matter. 
Don't think that just because you are a small time business or family business an attorney won't come after you, he or she will. 
Its all about the money and they will try to scare you into settling. 
They can even try to " pierce the corporate veil" and go after you personally if you shut down your company or bankrupt the company in court.*
*Do not be complacent with this.*


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## Stunt Carpenter (Dec 31, 2011)

My contract had to be reviews by a lawyer and the province when I got me prepaid license. A couple of red flags that could had been bad where found. I had been using that contact for 5 years at that point


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## greg24k (May 19, 2007)

Agree with the above, you have to make sure your contracts full proof and prepared in a way "that if you drive your truck into a homeowners house, they will pay you to fix your truck perse" Full proof contracts made me win a few lawsuits against homeowners and there was not a single thing in the contract their lawyer could pick apart.
Pay attention to the wording it must be structured where a customer feels protected yet responsible for everything, except what your responsibility is, and that is the scope of work and your workmanship. 
As with everything else as the legal stuff goes that contracts 101, consumer protection tells you what you must have listed in your contract and I don't have a problem with insurance, the approx. time the job will start and end (never agree to sign anything if the homeowner wants you to add "the time is of the essence" that's like signing your own death sentence)... insurance everyone got, and warranty shouldn't be an issue if you worry about your reputation and as a 3-day waiting period also nobody should have a problem holding a check for 3 days... What I do, right bellow the 3day protection, I add a waiver just a few lines just below the law saying " I read and understand the law of a 3 day waiting period, etc... I like to waive the 3 day period and begin the work right away and a signature" 
Good luck fellas and keep warm!.


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## iron_fist (Jan 15, 2021)

labor warranty should be in your contract. All product warranties can be given AFTER the install. Just make sure your contract states " all manufacturer warranties will be provided upon installation".
Most guys seem to have an issue with written change orders because they think they have "a good relationship with the customer" and they think they are friends and a verbal is good enough.. BS !!! The customer could care less about you and can care less about your family. The lawyers can care less if they take everything and you are left living on the street. I cannot overemphasize this enough.
The one "fuzzy part" regarding change orders is regards to start date. Every time a job is delayed due to weather, health, or deliveries, you need to do a written change order?
Not sure about that. I have all sorts of clauses in our contracts saying we aren't responsible for weather related issues, supply issues, delivery issues ect.. I am still not sure though, I forgot to ask the attorney about that. Thats a tough one to answer and doing a change order every time a start date is delayed seems a bit over the top. Perhaps some of our well informed legal experts may know the answer?


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## greg24k (May 19, 2007)

All change orders are paid upfront. Customers always ask for a receipt in writing some who know you and if they a repeat customer the relationship and trust already been established they don't care


iron_fist said:


> labor warranty should be in your contract. All product warranties can be given AFTER the install. Just make sure your contract states " all manufacturer warranties will be provided upon installation".
> Most guys seem to have an issue with written change orders because they think they have "a good relationship with the customer" and they think they are friends and a verbal is good enough.. BS !!! The customer could care less about you and can care less about your family. The lawyers can care less if they take everything and you are left living on the street. I cannot overemphasize this enough.
> The one "fuzzy part" regarding change orders is regards to start date. Every time a job is delayed due to weather, health, or deliveries, you need to do a written change order?
> Not sure about that. I have all sorts of clauses in our contracts saying we aren't responsible for weather related issues, supply issues, delivery issues ect.. I am still not sure though, I forgot to ask the attorney about that. Thats a tough one to answer and doing a change order every time a start date is delayed seems a bit over the top. Perhaps some of our well informed legal experts may know the answer?


A change order is when the scope of work changes,i,e if a customer wants to add a window or want to add crown molding here or there, etc It got nothing to do with whether or health or delivery date.
As it pertains to start date and finish date its proximity dates, there is nothing definite in the construction, i.e weather, delivery issue, material ordering, etc *FOR *as long as the job started or ended within a reasonable time. In other words, if I have to start a deck for a customer and applied for a building permit and I know approx. time for approval 1-2 weeks I'm not gonna take a job that it will take 2 months to complete. 
Or if I say it will be done in 7 days and for whatever reason, the job was delayed and it was finished in 14 days nobody will hold it against you for as long as the delay was due to a legitimate reason and you communicated the reason with a customer. But if someone says 7 days to complete and they went missing for a month without letting customer know, there will be consequences and who can blame the homeowner for being pissed. 
Also, stay away from entering into a contract as I mentioned earlier involving the clause " a time is of the essence" which means if the deadline is missed in a "time of the essence" regulated agreement, will result in a breach of contract pretty much in most circumstances. 
Good luck


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## Fishindude (Aug 15, 2017)

I think more importantly, these contracts are written documents to generate and review, so that both the contractor and the owner understand what is expected.
Review all of this stuff beforehand in meetings to be sure everyone understands the deal.

You can put all the legal mumbo jumbo you want in a contract, get it notarized twelve times, it can be 300 pages long, etc. but if one party falls down and quits delivering on their promises and it winds up in court, everybody loses. Good communication all the way through the process is the best preventative measure against disputes. Get away from the impersonal emails and texts and get back to having conversations if you want good client relations.


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## iron_fist (Jan 15, 2021)

I disagree. I don't care how many "good conversations" a contractor has with a good customer, that relationship can go south in a heart beat and having everything in writing helps in a very big way and in particular, a solid contract. It doesn't even need to be a long contract, its just has to be legal, protective, and have all the legal clauses required by your state.
If some scumbag attorney looks a strong contract, that can easily dissuade him from moving forward with a lawsuit and recommending that the client should just pay up. A good contract is to ensure you get paid. If an attorney see's weakness or senses it, he will go in for the kill with no mercy. A good contract keeps the rats away.
Remember, lawyers are cowards who fight battles and steal with the stroke of a pen. Like a bully in a school yard, they look for weak prey and a poorly constructed contract is exactly how these low life rats make money.
I don't care how nice and professional you were to Mr. and Mrs. Smith, they can easily get persuaded to suck your business dry by a scumbag lawyer. Everyone loves to talk about how unscrupulous contractors can be but no one ever mentions shady homeowners. Don't be stupid !
Remember, always be nice but never me stupid.


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## Fishindude (Aug 15, 2017)

iron_fist said:


> I disagree. I don't care how many "good conversations" a contractor has with a good customer, that relationship can go south in a heart beat and having everything in writing helps in a very big way and in particular, a solid contract. It doesn't even need to be a long contract, its just has to be legal, protective, and have all the legal clauses required by your state.
> If some scumbag attorney looks a strong contract, that can easily dissuade him from moving forward with a lawsuit and recommending that the client should just pay up. A good contract is to ensure you get paid. If an attorney see's weakness or senses it, he will go in for the kill with no mercy. A good contract keeps the rats away.
> Remember, lawyers are cowards who fight battles and steal with the stroke of a pen. Like a bully in a school yard, they look for weak prey and a poorly constructed contract is exactly how these low life rats make money.
> I don't care how nice and professional you were to Mr. and Mrs. Smith, they can easily get persuaded to suck your business dry by a scumbag lawyer. Everyone loves to talk about how unscrupulous contractors can be but no one ever mentions shady homeowners. Don't be stupid !
> Remember, always be nice but never me stupid.


I do not disagree that you need a good, well written contract.
I was trying to emphasize that you need to thoroughly review all of this stuff with the clients so everyone understand expectations before work commences, and you need routine communication during the course of work to assure all parties are informed regarding where things stand.

When push comes to shove and you're fighting with a client, nitpicking details in a contract, getting lawyers involved, etc. you are both screwed. 
Taking care of the client relationship through the process via good communication will generally help you avoid getting to this point.


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## greg24k (May 19, 2007)

When I was starting out decades ago and when the handshake deals started to fade out, I downloaded a ready-made contractor/homeowner contract for my state and showed it to my attorney, he told me to ditch that and just keep it as simple as I can, because it's an agreement between 2 people, you say you will do this for this much and homeowner accepts and he will pay for it. 
As time progressed some legalities started to surface and the consumer protection agency requires to have certain things entered into a contract only to protect the homeowner if you take the money and won't return or not complete the job.
As clause go they based on the circumstances,i.e and mostly it's the wording in the contract, same as you would put "any unforeseen situations is subject to an extra charge.
So when you meet with the homeowners, during the estimate you notice what needs to be said to protect yourself... i.e if the workspace filled with junk, you say the homeowner responsibility to move it. 
If they want you to move it, you put not responsible for furniture, this way if you start to throw things across the room, you not responsible if they break.
If kids or pets their same thing, the homeowner responsible to keep kids or pets out of the work area. etc
If you have to have something delivered, or have to go across the lawn, you put the contractor not responsible for lawn, sidewalks, and vegetation. etc.


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## goneelkn (Jan 9, 2010)

In Wisconsin, if you are going past the completion date in the contract, you need to give the customer a "notice of delay" as soon as you know about it, stating why there is a delay. And they have to sign it.


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## Patrickstew (Aug 19, 2016)

From literally 6 hours ago today in reference to the posted topic. In general terms what’s you all’s opinion on my need to add more verbiage to the change order I wrote on the fly to keep the guys moving today on the topic or does this read clearly enough? Previous contractor attached ledger directly to walls inside two bumpout corners and falling water had nowhere to go but into the framing. My feelings won’t be hurt to popular opinion. 


Sent from my iPhone using Tapatalk


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## Calidecks (Nov 19, 2011)

The thing about contracts is when everyone's signing everyone's happy. The customer may even be a little giddy.

But when they are being dug out and dusted off, that can be the only time a contractor actually studies his own contract and quite possibly be too late.

My state dictates font size, what needs to be bolded, etc., the whole enchilada. 

Almost like the state board doesn't want compliance....humm


Mike.
*___*


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## SamM (Dec 13, 2009)

iron_fist said:


> labor warranty should be in your contract. All product warranties can be given AFTER the install. Just make sure your contract states " all manufacturer warranties will be provided upon installation".


My contract states that manufacturer warranties will be provided once final payment is received.

Also if they don't pay completely all warranties are void.

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## Seven-Delta-FortyOne (Mar 5, 2011)

...


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## VinylHanger (Jul 14, 2011)

I had a customer spend a couple hours with me after I sent them the contract.

She had spent her while career doing contracts for very, very large businesses. It was a big help.

She also caught a few minor typos and reversed phrases as well.

Mine is good, she made it much tighter.

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## KAP (Feb 19, 2011)

Calidecks said:


> The thing about contracts is when everyone's signing everyone's happy. The customer may even be a little giddy.
> 
> But when they are being dug out and dusted off, that can be the only time a contractor actually studies his own contract and quite possibly be too late.
> 
> ...


And that STILL only provides you with a certain level of protection depending on the lawyer/judge...


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## greg24k (May 19, 2007)

Agree with all that been said. On a general note, judges know the contractors are not attorneys (talking about basic remodeling residential jobs,i.e decks, basements, additions, kitchens, etc) when a case goes to court the judge looks at the 3 things which *Both parties *must meet and that is the 3 most important things both parties agreed to meet...and that is the scope of work, terms, and conditions of the agreement. Period. If one of the parties will not meet its obligation, it will not end well. Someone will get sued, someone's reputation will be tarnished (usualy contractors if he fails to do what he supposed to), etc 
From personal experience doing this for almost 40 yrs, it is very easy to have a record and reputation 100% customer satisfaction guaranteed and I'm sure many here can agree with me. 
Sure, mistakes happen, disagreements/disputes come up from time to time, and that is when our professionalism comes in play and that is knowing how to resolve issues and make your customer happy and that is very easy to do no matter what kind of a customer you're dealing with and we all know everyone has it's weak points (being this a wife or a husband) we just have to find them and everything will work in your favor... Not to mention those who been at it for a while are able to see red flags from the get-go when it will be difficult, and when it will be a smooth sail and we know how to push a few buttons during initial meetings to see if any red flags will come out and it's our job to figure out can we handle that and wanna deal with it or just walk away for our sake and move on to the next job. 
Good luck and happy contracting!


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## iron_fist (Jan 15, 2021)

In court, its all about what is stated in the contract and having all the neccessary clauses requred by your state. A judge does NOT care how professional you are ,or how talented you are, or how good your reputation is. If you dont have your warranty info in the contract for example and the customer claims he had an issue with your work despite you going there a thousand times to fix it, you will no doubt get hit with a technical violation ($100 ) but get slammed with attorney fees of close to 25k.
Its the attorney fees that they kill you with. If they prove the violation resulted in any sort of damage, you pay tremble damages( 3 times the total amount of contract ) plus attorney fees.
A painter I know did a home and charged then $4400. He didnt have any warranty info and he didnt have the 3 day right to cancel clause on the contract which most painters dont. When the customer refused to pay him the balance of 3k because they said the wall colors looked too dark, he tried to take them to small claims. They hired an attorney and they then filed a consumer fraud lawsuit for 30k. He settled for $8500 which is a lot of money for him. You may ask why didnt he just try to reason with the customer? He did. They said they were so upset, they were done with him. It was all melodrama to enhance their cause ( ripping the guy off). If he had a legit contract he could of easily told the customer to go “F “ themselves and he would be going for blood. 
BEWARE!!!!!!!!!!


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## greg24k (May 19, 2007)

iron_fist said:


> In court, its all about what is stated in the contract and having all the neccessary clauses requred by your state. A judge does NOT care how professional you are ,or how talented you are, or how good your reputation is. If you dont have your warranty info in the contract for example and the customer claims he had an issue with your work despite you going there a thousand times to fix it, you will no doubt get hit with a technical violation ($100 ) but get slammed with attorney fees of close to 25k.
> Its the attorney fees that they kill you with. If they prove the violation resulted in any sort of damage, you pay tremble damages( 3 times the total amount of contract ) plus attorney fees.
> A painter I know did a home and charged then $4400. He didnt have any warranty info and he didnt have the 3 day right to cancel clause on the contract which most painters dont. When the customer refused to pay him the balance of 3k because they said the wall colors looked too dark, he tried to take them to small claims. They hired an attorney and they then filed a consumer fraud lawsuit for 30k. He settled for $8500 which is a lot of money for him. You may ask why didnt he just try to reason with the customer? He did. They said they were so upset, they were done with him. It was all melodrama to enhance their cause ( ripping the guy off). If he had a legit contract he could of easily told the customer to go “F “ themselves and he would be going for blood.
> BEWARE!!!!!!!!!!


Of course, you have to include what is required by law which is not much a few paragraphs,i.e start and completion dates, warranty, and 3 days waiting period. The only time the case will go in front of the judge is if you or your customers will not fulfill its obligation and that is the only time someone will pay attention to that and that is IF.
As your example goes *"A painter I know did a home and charged then $4400. He didn't have any warranty info and he didn't have the 3 day right to cancel clause on the contract which most painters don't"*
The painter you know he is an idiot for not including what he is supposed to in the contract and leaving himself with a 3k balance on a $4,400 paint job, you should knock some sense into him how to run his business.
As the 30k lawsuit goes his attorney was either stupid or incompetent. You pad a 30k lawsuit on a 4k job, you can tell this story to someone who doesn't know any better. There are no damages to the homeowner he did complete the job and he got stiffed for 3k... That said if he is a licensed contractor and if he didn't include the warranty and he did complete the job, I would easily collect what is owed in any court. The court is all about fairness not to score from.
Now if he is an unlicensed contractor and he did the job and got stiffed... Yes he will not get to collect his profit *BUT, *he will get to collect what he spent on material for that job and he better have receipts.


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## iron_fist (Jan 15, 2021)

You are wrong Greg .. the fact that the customer is saying the job didnt come out correctly and he didnt have warranty info, the judge would of probably not awarded tremble damages but definitely attorney fees. Thats why scumbag lawyers are the ones that actually write these consumer fraud laws.. they make a living off them.
as far as the painter being an idiot for not having the proper clauses in his contract.. No doubt and that is why I created this post. How many reputable contractors on this board have flawed/ vulnerable contracts? I guarantee much more than half if them.


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## greg24k (May 19, 2007)

iron_fist said:


> You are wrong Greg .. the fact that the customer is saying the job didnt come out correctly and he didnt have warranty info, the judge would of probably not awarded tremble damages but definitely attorney fees. Thats why scumbag lawyers are the ones that actually write these consumer fraud laws.. they make a living off them.
> as far as the painter being an idiot for not having the proper clauses in his contract.. No doubt and that is why I created this post. How many reputable contractors on this board have flawed/ vulnerable contracts? I guarantee much more than half if them.


If the job didn't come out right he should be given a chance to fix it, if not they have the right to go after him for the damages but only for the amount, someone else will charge them to fix what he fk'ed up and in this case, they still have the 3k of his money so they can't do anything about it.
The 3day waiting period as the deposit goes doesn't play a role here, it has nothing to do with the deposit being returned or not because the job been completed.
As the fraud law goes there is no fraud... look up the definition of fraud:
*"Fraud* is an intentionally deceptive action designed to provide the perpetrator with an unlawful gain or to deny a right to a victim"
He said he will do A and he did it... He messed up the job and perhaps they asked him to fix it and didn't return to fix it that's his problem I would tell him also go and fk-himself... But he must have a chance to make it good if he is not provided that opportunity (unless he is a total fk'up and has 2 left hands) they got nothing on him.


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## iron_fist (Jan 15, 2021)

Greg, Im telling you, if he is missing a clause in the contract , he can be sued and be liable for attorney fees.
if he ( in good faith) keeps going to the homeowner to try to resolve it and the homeowner keeps saying they arent happy, they can easily file a lawsuit since certain clauses werent in the contract. I had an attorney tell me the fraud laws are so tilted towards the homeowner, its eggregious.
Consumer fraud doesnt have to mean there was actual fraud. if you innocently dont include warranty info on a contract, and trust me, many contractors dont, that is considered a fraud violation.
Do yourself a favor and talk to a home improvement attorney and he will fill you in.
you seem like a good guy, i wouldnt want to see you or anyone else here have a problem.


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## Calidecks (Nov 19, 2011)

Any contract can be negated. 


Mike.
*___*


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## G&Co. (Jul 29, 2020)

Yes. A very important legal concept many don't know or ignore. If a contract's terms are violated by either party, a court cannot force compliance. The contract has been breached. So the only thing the court can do is award (or not) money based on liquidated damages. You want money, you have to prove damages.









Construction Contract Clauses: What Is a Liquidated Damages Clause?


A liquidated damages clause sets a certain amount of money that can be recovered in the event a party breaches contract. Get construction payment help here!




www.levelset.com


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## iron_fist (Jan 15, 2021)

What you guys are missing is even if the homeowner cannot prove damages but you innocently left something out of a contract, the court WILL fine you $100 for a technical violation. no big deal right ?
Wrong !!!! The judge WILL also order you to pay attorney fees. Do you think the judge will only award $2k for attorney fees??? Hell No !!! Much more.
Thats where contractors get screwed.
I am telling everyone, call a home improvement attorney and get a free consultation. Ask him to review your contract and let me know how that goes.
Am I trying to scare you ? Yes , you bet I am. Beware !!!!


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## greg24k (May 19, 2007)

iron_fist said:


> What you guys are missing is even if the homeowner cannot prove damages but you innocently left something out of a contract, the court WILL fine you $100 for a technical violation. no big deal right ?
> Wrong !!!! The judge WILL also order you to pay attorney fees. Do you think the judge will only award $2k for attorney fees??? Hell No !!! Much more.
> That's where contractors get screwed.
> I am telling everyone, call a home improvement attorney and get a free consultation. Ask him to review your contract and let me know how that goes.
> Am I trying to scare you? Yes, you bet I am. Beware !!!!


Listen, just think about it, if this is the case anything left out in the contract the homeowner can stiff the contractor end of the job and file a 30k or 50k or 100k lawsuit. Just doesn't make any sense.
Where did the 30k come from? Why not 10 or 20k.
Any case you bring to court you have to show damages in order for the court to compensate your loss and to make you whole. End of story.
That said I don't need to call anyone I know the law, I wasn't born 10 min ago. Do you scare me? Hell no, not even close because you not making any sense.
Good luck


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## iron_fist (Jan 15, 2021)

Greg
you are wrong. Look at the consumer fraud law in your state and look at technical violations. I see you are in the state of New Jersey. i easily found this.
Read :::
Homeowners who sue home improvement contractors win even when they lose. A New Jersey Appellate Division panel recently held that homeowners are entitled to recover attorneys' fees and costs for technical violations of the New Jersey Consumer Fraud Act, ("CFA"),_ N.J.S.A. 56:8-1 et seq_., even when the home improvement contractor successfully dismisses the homeowner's consumer fraud claims at trial. The import of this decision is two-fold: home improvement contracts must comply with the CFA's home improvement regulations, and contractors should carefully consider pre-trial settlement of consumer fraud claims to avoid paying the unsuccessful homeowner's attorneys' fees.
The CFA is a consumer protection law that applies to the home improvement industry. The CFA punishes home improvement contractors who lie, knowingly fail to disclose information material to the transaction, and violate its regulations. For home improvement contractors, the Home Improvement Practices Act ("HIP") is the CFA regulatory act that governs their business practices and documents. If a consumer proves that the contractor violated the CFA, he automatically recovers attorneys' fees and costs. Treble ("triple") damages are awarded when the consumer causally connects the CFA violation to an ascertainable loss-an out-of-pocket expenditure.
All is not lost for contractors. A consumer must have standing to sue to seek these damages. Standing under the CFA requires the consumer to successfully claim, at the outset, that the contractor's alleged CFA violation resulted in an ascertainable loss. For example, the consumer must show that the contractor's misrepresentation caused him to spend money to hire another contractor to perform the work. The ascertainable-loss standing requirement allows contractors to cut-off frivolous CFA claims before they begin. A home improvement contractor can halt the consumer's claim by convincing the court, before or at trial, that the consumer has not suffered an ascertainable loss. A consumer that cannot plead an ascertainable loss in his complaint does not have standing to sue. Likewise, a consumer that fails to prove an ascertainable loss at trial will have his claims dismissed. But, if the consumer-turned-plaintiff defeats the motion, or successfully persuades the court that the contractor violated the CFA, the case will proceed to trial, barring a settlement.
In _Perez v. Professionally Green, LLC_, this exact scenario occurred. The homeowners sued a professional landscaping company and swimming pool installer, alleging breach of contract and warranty, negligence, and consumer fraud. Specifically, the Perezes alleged that the contractors failed to include start and completion dates in their contracts, a HIP violation. _N.J.A.C_. 13:45A 16.2(a)(12). Before trial, the court held that the contracts failed to include these dates, entitling the homeowners to attorneys' fees and costs.
At trial the homeowners could not connect the HIP violation to an ascertainable loss. The trial court thus granted the swimming pool installer's motion to dismiss the Perezes' consumer fraud claims, because they failed to prove that the lack of start and completion dates in the contract caused them to suffer any damages. (On appeal, the parties did not raise the question of whether the loss of a swimming pool for a period of time constitutes a compensable loss under the CFA). Despite the dismissal of their CFA claims, the Perezes still recovered their attorneys' fees and costs for proving that the contract violated the HIP regulations.
The swimming pool contractor appealed the award of attorneys' fees and costs to the Perezes; the landscaping company settled before trial. The contractor argued that the trial dismissal of the homeowner's consumer fraud claims meant that the Perezes did not have standing to recover their attorneys' fees and costs. The contractor advocated requiring consumers to prove both a CFA violation and an ascertainable loss before a consumer recovers attorneys' fees and costs. The appellate court disagreed. It held that once a consumer pleads a bona fide claim of ascertainable loss-which the Perezes did by claiming they did not have use of their swimming pool-the consumer has standing to recover his attorneys' fees and costs for the contractor's CFA violation.
At first glance, the decision is not overly significant; it clarified CFA standing requirements and reinforced that consumers automatically recover attorneys' fees and costs when they prove technical violations of the CFA regulations. A closer reading, however, reveals its worth. For starters, the decision underscores that most HIP violations can be eliminated with proper contract drafting and review. Many HIP regulations are violated without the contractor committing, and the consumer proving, actual fraud. The lack of start and completion dates is an excellent example. The consumer fraud claims and the attorneys' fee award in _Perez _could have been avoided had the contractors simply included start and completion dates in the contracts. Moreover, consumers are often hard pressed to prove an ascertainable loss related to many of the HIP regulations. As a result, they might not have standing to sue at trial. However, if the consumer can plead an ascertainable loss, significant attorneys' fees will be incurred defending the case up to trial.
The last take-away focuses on the decision to try a case. Contractors are fiercely proud of their work. They rightfully believe that they can defend and defeat construction defect claims. Unfortunately, contractors often decide to litigate cases instead of settling them because the homeowner has abused them throughout the construction project. The last thing the contractor wants to do is to pay the abusive consumer any money. However, when consumers prove that CFA violations caused ascertainable losses, many times the jury awarded attorneys' fees and treble damages will overwhelm the actual judgment amount. Thus, the contractor should seriously consider whether trying the case is in its best interest when the consumer/plaintiff pleads a CFA violation and a connected ascertainable loss. To avoid these pitfalls, contractors need to carefully examine whether their contract and business practices conform to the CFA's regulations. Attorney review of home improvement contracts is a must for contractors to avoid paying attorneys' fees awarded to consumers who cannot prove an ascertainable loss.


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## greg24k (May 19, 2007)

Exactly my point, I told you in my post... you should read what you post and understand what you reading before you post it.


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## Kowboy (May 7, 2009)

You guys are putting too much to paper. You screw yourself or not at customer selection. Pick 'em right and you'll never have a problem, no matter what's written and signed.


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## Flipperock (10 mo ago)

In order to solve this issue quite easily, you can always contact a private detective company, for example, in Counterfeiting Investigations - Corporate Investigation / . With the help of this company, I have solved a huge number of problems that I encountered while running my business. The main competitive advantage of these guys is that all employees of this agency are former federal agents with access to incredibly important information. That is why it is worth contacting them. I hope I helped you.


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## Ayangonz (Apr 6, 2011)

iron_fist said:


> You are wrong Greg .. the fact that the customer is saying the job didnt come out correctly and he didnt have warranty info, the judge would of probably not awarded tremble damages but definitely attorney fees. Thats why scumbag lawyers are the ones that actually write these consumer fraud laws.. they make a living off them.
> as far as the painter being an idiot for not having the proper clauses in his contract.. No doubt and that is why I created this post. How many reputable contractors on this board have flawed/ vulnerable contracts? I guarantee much more than half if them.


All of that sounds good. However, in the end, a contract is only as good as the two people that sign in. 

You can put whatever you want on a contract, but if someone from either side is intent on screwing you, they will. 

You will all eventually come to this realization if you are in this or any other industry long enough.


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## VinylHanger (Jul 14, 2011)

I once worked for a company that had "We will not do any painting whatsoever on this project", in three places in the contract.

After we were done, the customer asked why we didn't paint the window trim among other things. We pointed to the three places, initialed, in the contract. They still thought we would be painting, as that "obviously", didn't mean "no painting at all". They raised a huge fuss. I think my boss had to go rounds with them in the end.

In the end, it all depends on having good quality customers, and good communication.


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