A short story...
One of the largest roofing companies in the US was sued by one of its clients – I’m talking a billion dollar company that does 8,000 roofs a year!
No one could have guessed the potential ramifications that this small lawsuit could have for contractors nationwide.
They had some language in their construction contract that stated that they would work with the insurance company to help with the consumer’s claim as well as other innocent wording.
The lawyer for the consumer jumped on that and made the case that their contract was null and void because there was language in it for activity that was illegal in that state for a roofer to be performing – UPPA language.
The consumer prevailed in court and the judge not only ruled that the contractor’s contract was null and void, but also ruled that the contractor must return every penny that they collected for roofs and other work, done under this contract, to all property owners, in full, upon request of course – going back to 2005!
What an impact on their business. The legal reason was, that since the contract was null and void the day it was signed, the consumer had never agreed to pay the contractor one cent for the work they performed.
What's the deal?
Contractors are far more vulnerable than they are aware of, because of a tool you use every day – a poorly conceived, incorrectly worded contingency contract and IT’S WORKING AGAINT YOU, not for you.
Candidly, what could be more boring than contracts (construction agreements) – even for contractors?
Hold on a second!
Wait just a minute! These documents are critical.
Imagine a warrior going to battle without a shield. How vulnerable would he be? Look… the equivalent of a warrior’s sword is your pen. When you ink the deal, that secures a client. The equivalent of your shield is your contract.
This unassuming document protects contractors from the occasional unscrupulous consumer from screwing them over after they’ve put a ton of work into helping that client get a comprehensive scope of work and fair market rate for ALL their damages.
A contract is like the lock on your back, screen door – it keeps honest people honest. A committed thief is going to lie, cheat and steal no matter what you do. Nevertheless, a really good contract will lock in even a relatively honest consumer. Once they realize that they have contractually obligated themselves to YOU to perform their work, they stop the foolishness that occurs when greed rears its ugly head.
Here's the problem...
The majority of contract attorneys we have spoken to, say contingency contracts are virtually unenforceable.
Here’s why – basically a contract is nothing more than a meeting of the minds – laid out in writing. “I am giving something of value in exchange for you giving something of value.”
For example, I’ll pay you $10,000 and I get a new roof. The more specific the contract is, the more enforceable it is obviously.
Essentially, the contingency construction contract is stating that ‘we will be doing some amount of work…. to be determined in the future…. for some amount of money…. to be determined in the future.
Can a contract be more vague? That’s why contingency construction contracts are essentially not worth the paper that they’re printed on.
The other HUGE problem – a colossal vulnerability that 95% of insurance restoration contractors have and are not aware of is, many of their contracts are null and void the day the client signs them.
This is because the majority of states have some public adjuster licensing laws in place.
To negotiate with anyone regarding an insurance claims violates these laws.
It’s referred to as public adjusting without a license or sometimes UPPA – the unauthorized practice of public adjusting.
The critical part!
If your contract has ANY language in it like this at all, it could very well cost you your business – we’re talking bankruptcy.
And according to Wikipedia, a full 44 states have some form of statutory law that makes public adjusting without a license a crime.
Is your business really at risk without these docs? THE SHORT ANSWER IS… YES!!!
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