# Working with no contract



## cwatbay (Mar 16, 2010)

boman47k said:


> Bambamm
> 
> 
> In that case, do you think you would have gotten your money with a contract?
> ...


When someone files Chapter 11 or Chapter 7, whoever has paperwork for a claim of payment gets to the front of the line. Especially if you want to challenge the bankruptcy (i.e. you are not going to let them get away without paying). Usually banks and credit card companies are first in line, everyone else is second


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## boman47k (Oct 13, 2006)

cwatbay said:


> When someone files Chapter 11 or Chapter 7, whoever has paperwork for a claim of payment gets to the front of the line. Especially if you want to challenge the bankruptcy (i.e. you are not going to let them get away without paying). Usually banks and credit card companies are first in line, everyone else is second


 
I realize this. I don't kno what the amount owewd was or where it would be on the list of debts owed.

Maybe he should have placed a lein on the property he worked on.


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## Heritage (Mar 20, 2007)

My business is too valuable for me to jeapordize by placing even a small portion of it in the hands of a complete stranger and rolling the dice, hoping they honour handshakes.

Selective amnesia kicks in real quick with HO's when they see the bills.

When you have a bullet proof contract/CO's/BR's, you never have to "ASK" for your money 

Last thing I need is a schmuck acting like he's doing me a favour by paying me what he owes me.

3 times I went without contracts, 3 times I got bit. I don't want to have to pull a De Niro.

http://www.youtube.com/watch?v=MmYBpgAC7Uw&feature=related


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## Framer53 (Feb 23, 2008)

Heritage said:


> My business is too valuable for me to jeapordize by placing even a small portion of it in the hands of a complete stranger and rolling the dice, hoping they honour handshakes.
> 
> Selective amnesia kicks in real quick with HO's when they see the bills.
> 
> ...



Just might want to look at the type of ho you are doing business with.

I very seldom write contracts, but then again I only do little jobs here and trere anymore.

I had my lawyer explain to me, if a person doesn't want to pay, they won't. A little piece of paper might help if the amount is large enough to go to court over, but if it isn't, you are at the mercy of the ho anyways.

Complicated or large jobs, would always get written down..

Little story. Before I had my accident that disabled me, I worked with a framer that very and I mean very seldom wrote up any contracts. We had at one point close to 30 framers working.

He got paid. Why? Because of the quality of the contractors he subbed from!


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## UncleBob (May 5, 2010)

Just wanna throw into the mix: small claims procedures only cost the filing fee ($60 from memory) for small debts < $2k no need to get a lawyer. A contract or even a 'letter of understanding' can stand up pretty good when attached to the claim with photos of work done, invoices for materials used from suppliers, testimony letter from so and so... etc., procedures are probably described online for your local court


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## MALCO.New.York (Feb 27, 2008)

Heritage said:


> Last thing I need is a schmuck acting like he's doing me a favour by paying me what he owes me.
> 
> 3 times I went without contracts, 3 times I got bit. I don't want to have to pull a De Niro.
> 
> http://www.youtube.com/watch?v=MmYBpgAC7Uw&feature=related



I immediately thought of this song and the various Genre Specific versions of it. Not only does the Song fit your post, the Genre is part of what it is that I do 7 Days a Week. I also believe that I have a responsibility to expose as many persons to the World of EDM (Electronic Dance Music), as I possibly can!


http://www.youtube.com/watch?v=fKzymtAVBqg


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## superseal (Feb 4, 2009)

As part of our PA state license, we have to provide fixed price contracts which comply consumer protection laws - supposed to have start & finish dates, 3 day right to cancel, no more than 1/3 down, blah blah blah.

Never had a problem doing handshake deals, but now we're committing consumer fraud for not providing a compliant contract. Leave one item out and your stewed in court. 

Additionally, many townships require a copy of the contract for permit applications when they used to just ask valuations for determining price of permit. 

For me, I really hate giving that nice old women a six page contract to install a stormdoor


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## BamBamm5144 (Jul 12, 2008)

Boman, cwatbay already said what my reply would be. The amount left to be owed was around 5800. It would not have been ethical for me to file a lein on the property considering those people paid in full.


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## MALCO.New.York (Feb 27, 2008)

BamBamm5144 said:


> Boman, cwatbay already said what my reply would be. The amount left to be owed was around 5800. It would not have been ethical for me to file a lein on the property considering those people paid in full.



I DO NOT UNDERSTAND! Not one bit.

Please explain!


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## Framer53 (Feb 23, 2008)

MALCO.New.York said:


> I DO NOT UNDERSTAND! Not one bit.
> 
> Please explain!


Would like to here that one myself!:whistling


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## cwatbay (Mar 16, 2010)

superseal said:


> As part of our PA state license, we have to provide fixed price contracts which comply consumer protection laws - supposed to have start & finish dates, 3 day right to cancel, no more than 1/3 down, blah blah blah.
> 
> Never had a problem doing handshake deals, but now we're committing consumer fraud for not providing a compliant contract. Leave one item out and your stewed in court.
> 
> ...


Did you ever notice how those nice little old ladies - you know, the ones that give you those nice warm oatmeal raisin cookies right out of the oven, along with an individual serving bottle of Sunny Delight to wash 'em down with --- turn into the "screaming, hell bent, ***** queens of the universe" if things don't go quite right, or, when it comes time to pay up with all the little extras you had to do. 

Have a nice day :thumbup:


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## Leo G (May 12, 2005)

I give a very detailed contract stating what will be done and what materials will be used and exactly what I am building and whether I am going to be installing or it will be picked up.

For established customers I will do things over the phone or through email. If I have a few dealings with them and have no monetary issues with them I will do jobs up to $5000 without a down payment. But a new client will always get a contract and will have to fork out the for the down payment.


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## JRSeifert (Apr 22, 2010)

Here in MN, every job requires a written contract with detailed scope of work, payment schedule, conditional clauses, pre-lien notices, and a few other state mandated notices included (mold, urea-formaldehyde... I think that's it). 

On top of that, it's now required that you provide the HO with a written copy of the state mandated warranties for construction work. I just include this at the end of my contract with an "acknowledge, sign, date" field at the end for proof that it was read and understood. I even try to use it as a selling point - "Hey, we're proud to provide this warranty with our work!"

Anyway, my contract is 10 pages long, though I will selectively omit conditional clauses if they absolutely will not apply to the job I'm signing, like my damage to plants and shrubs clause. I wouldn't include that in a basement finish bid for example, but it'd sure be in a roofing or siding bid. So that can shorten it up.

Warranty is another 5 pages - which would fit on 2 pages, but becomes almost unreadable that way.

If the project is big, I'll type up a detailed description of the work, and a separate detailed payment schedule - average 1 page each.

So what are we at? 18 pages, worst case scenario? It's daunting, but I sit down with my customers and go through the whole thing providing explanations and answering questions. I wrote my contract to be fair and to provide protection to both parties. I see it as not only legally necessary, but an important step in building trust and defining responsibilities, which will - if I'm doing my job - be reinforced by the actual work process.

If a customer won't sign a contract or doesn't want to work with one, then I won't work with them. I've been burned a few times in my short career, and it sucks.


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## Framer53 (Feb 23, 2008)

arranty is another 5 pages - which would fit on 2 pages, but becomes almost unreadable that way.>>>>>>>>>>>>>>>>>>


WOW!

5 pages??


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## Mike Finley (Apr 28, 2004)

JRSeifert said:


> Here in MN, every job requires a written contract with detailed scope of work, payment schedule, conditional clauses, pre-lien notices, and a few other state mandated notices included (mold, urea-formaldehyde... I think that's it).
> 
> On top of that, it's now required that you provide the HO with a written copy of the state mandated warranties for construction work. I just include this at the end of my contract with an "acknowledge, sign, date" field at the end for proof that it was read and understood. I even try to use it as a selling point - "Hey, we're proud to provide this warranty with our work!"
> 
> ...


That warranty and contract I'd like a chance to see. :thumbsup:


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## katoman (Apr 26, 2009)

Here's what's going on with that situation. First off the GC is very experienced. Contracts are solid. All change orders negotiated and signed.

Now the sub has finished his work. The HO has his 10% holdback. The sub sends him a bogus invoice, asking for another 10 thousand. Says if you don't pay up, I'll lein your home.

Wants the holdback money the day before the legal pay date. -So he can still file the lein. The HO's lawyer says no, pay it on the proper date, which is the day after the lein rights expire.

So the sub now leins the home for 75 grand, more than half the total contract amount. Then he calls the HO and says - well, will you pay up now?

The HO has hired a very experienced construction contracts lawyer/litigator. He says what this sub is doing is basically extortion, and he will see him in court. They can coupe 85% of their costs.

So the HO will win this one, expected time frame is about one year.

My origional point was I don't see how any contract can protect you from something like this.

I only work for people I trust and only use subs I know and trust. But I'm just a small contractor. The big guys must have some real nightmares to deal with. Think I'll stay where I am. :thumbsup:


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## Heritage (Mar 20, 2007)

katoman said:


> My origional point was I don't see how any contract can protect you from something like this.


You can file a lien and not "perfect" it. In Ontario, that's 45 days to file, 45 to "perfect".

With the Contractor (GC), the lien period is initiated on substantial completion if a certificate of substantial completion is issued, 1% balance or full completion on the contract.

In the case of sub-contractors, it's the 45 day period after the last date of services or material supplied on the premises.

A lien is unenforceable if not "perfected", which is the 2nd period of 45 days.

In layman terms, you can file the lien with the Land Registry within 45 days and wait until you get paid. If you don't get paid, you can then "perfect" the lien, thereby making the actual lien "enforced". However, the lien amount must be the actual balance owed.

If you are owed 10k, you cannot place a lien for 100k, it is unenforceable and can/will result in a counter suit.

Ergo, with a proper contract and up to date accounting/CO's, the final amount owed is clear and enforceable so long as you file your lien within the allotted time frame. It's also wise to document the project with employee time sheets, pictures, invoices, receipts, and log sheets.


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## katoman (Apr 26, 2009)

Heritage - that's all true. In this case however, it is the threat of lein and the costs of defending the lein that the sub was hoping would squeeze anothe 10 grand out of the client.

The sub did perfect the lein, and after leining for the 75gs, asked for 50gs. What an idiot. 

His day in court will be nasty indeed. He picked the wrong client to do this to.

But as I said, no contract can protect you from this kind of unethical thing. Yes, the contract will hold up in court.


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## Leo G (May 12, 2005)

The 10% hold back, Do you always get that the day after the legal period to lien is over? Is that how it works? Or was it just coincidence on this occasion?


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## JRSeifert (Apr 22, 2010)

Framer53 said:


> arranty is another 5 pages - which would fit on 2 pages, but becomes almost unreadable that way.>>>>>>>>>>>>>>>>>>
> 
> 
> WOW!
> ...


It's all state mandated. If you follow the law and include the state-enforced warranty as it's scripted on the MN Revisor's website, it's damn lengthy. 10 point font with NO breaks or spaces fits on two, or 2 1/2 pages - I forget which. I spaced all the definitions and sections for readability, and for the fact that a person can find a specific section a lot quicker by scanning the headings, rather than muddling through some huge block of text.

I never said I LIKED it. I just do it because I personally feel it's necessary and proper. I'd rather operate on a handshake any day.



Mike Finley said:


> That warranty and contract I'd like a chance to see. :thumbsup:


I'd be happy to post it or send it to anyone interested. I wrote it myself (after reading a LOT of other contracts) and had it reviewed and approved by a local attorney. I update it at least twice a year to add clauses to cover conditions I hear about or experience and wish to avoid or establish a course of action for in future projects.


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## Mike Finley (Apr 28, 2004)

When you get a chance, please email to [email protected]

Thanks


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## hilal.itani (Jan 17, 2009)

UncleBob said:


> a contract can be verbal and will stand up in court if one party can 'prove' the substance of the agreement. proof? a witness, a record of payment, evidence of work done, can help - yup! work on a handshake I guess still exists


Yep, but it is better to have a signed contract with correct and proper conditions specifiing scope, time, cost, payment, quality, etc....

The non-use of contracts has a double sided effect. sometimes it helps you and sometimes it doesd not. 


regards;


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