5 Contract Musts for Every Contractor

A contract is a legally binding agreement between two parties. 

For contractors they set the tone for how a job will be performed and help the client understand what to expect.  When providing a contract, it’s important to include every eventuality. Clauses added to the contract address certain aspects of the contract and how certain situations will be handled. These address situations that may or may not arise, but can often have costly repercussions.  Though clauses will be different for every job, there are certain ones that are important to include. 

Arbitration Clause
In the event something goes wrong with the job and you feel you need a third party to help solve the problem, an arbitration clause will make it clear how you will do this. It will clearly state who has the power to initiate the arbitration process who will select the arbitrator and who will pay for it. While no one expects issues to arrive when they begin a job, this clause will prevent long, drawn-out lawsuits in the event that something goes wrong. Termination In the event that the contractor or client wants to exit the contract early, what will the plan be? Can the contract be terminated before a certain date?  What happens with the deposit money?  How many days in advance must notice be given? These are all questions that will come up if the contract is terminated early, so it is best to have agreed upon answers laid out in the contract. 

Matters Beyond the Contractors Control
Even the most well prepared contractor cannot control every situation. There’s always the possibility of bad weather, vandalism, acts of God. The environment around you and sometimes even your employees are unpredictable. Expect the unexpected and add clauses that will give you reasonable extensions when things occur that are out of your control. 

Payment Schedule
This seems pretty straight forward but payment is, obviously, an important part of the process, so it’s important to have everything agreed upon before the job starts. There are a lot of bases you’ll want to cover and you’ll want to make sure everything is clear. For example, indicating that a progress payment is due “after the first coat has been applied” is clearer than saying “after 50% of work has been completed.”  Also, cover what happens if a customer refuses to pay. 

Work Standards
Defining the standards you will abide by when performing work will help deal with “nit picky” customers when you come across them. Set down the standards by which your work will be evaluated ahead of time and prevent picky customers from nitpicking every detail. 

These are important issues to include in a contract, but they are by no means everything that could arise. Some other things you should consider addressing are: 

•    Adding work in the middle of a project
•    Delivery of notices
•    Damages caused by either contractors, pets, kids, etc. Who will pay in each given situation?
•    Time for performance
•    Safety issues/insurance/OSHA standards 

The important thing is to cover the situations that could cost you or your customer valuable time and money. 

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