Whether you are an established contractor with multiple employees and portfolios, or you are a small, independent contractor, creating a solid contract is vital to your business’ success and the validity of your license.
A contract established both your and your client’s responsibilities, a timelines, prices, and expectations. A mistake in the contract, or a gap, could lead to a breakdown in your relationship with your client that could even result in litigation against your company.
Many states require a signed contract to be complete before construction begins, and you should absolutely never begin work until you and the client have agreed upon and signed a contract.
If you have only recently acquired your contractor license and need help writing your first construction contract, follow these simple steps to compose a strong, problem free agreement with your client.
Step 1: Review State and Local Law Requirements for Inclusion
Before you even write your title, the first thing you need to do is check local and state law requirements. Many states require certain clauses, disclosures and noticed to be included in construction contracts. These are vital and must be included in your contract.
Furthermore, your local state licensing authority will likely have templates and helpful advice on writing contracts for your area. Don’t feel like you must completely reinvent the wheel. Use the resources available to you.
Step 2: Create a Title
Once you are confident about all state required inclusions, you are ready to proceed. The next step will probably be the easiest – give the job a title that clearly identifies the project.
Put the title at the top. You’ve officially started composing your first real contract!
Step 3: Compose a Preamble
Before getting into the details of the job, compose a preamble that will establish terms, names of the involved parties, commencement and end dates, location and date of the agreement.
Step 4: Create a Project Overview
Next, provide a broad overview of the project from start to finish. This will not be a detailed description, rather a brief overview of the purpose of the project and its goals. Basically, you will sum up what you will be doing and why in a sentence or two.
Step 5: Provide an Exact, Thorough Description of the Work
After providing an overview, then you should provide a very detailed description of all of the work to be completed.
This description should include the specific work to be done in all of its stages, the tools that will be used, the materials, and the equipment. Be as specific as possible. If the client chose a specific brand of paint, or specific brand and color of tile, for instance, state these exact details in the description.
Step 6: Establish a Clear Project Schedule
Your state may or may not require this, but you should include a clearly stated, realistic project schedule. This should include start and end dates, or a proposed number of days for the completion of the project.
Stages and steps in the project should also have dates or timelines established. It would also be wise to leave room for any variance in the schedule and to have contingency plans established in the timeline as well.
Step 7: Identify How Contingencies Will be Handled
You will also want to have a clause that describes how unexpected and uncontrollable events will be handled, especially if the project is in an area or being done at a time where sever weather may be a factor.
Clearly state how weather events or unexpected discoveries in the project itself will allow for a new timeline or previously unplanned steps in the process.
Step 8: Clearly State Financial Requirements
You must also make very clear any and all financial requirements, responsibilities, and totals. State all due dates, clearly state the amount of any deposits and installments and when they are due. Include information about any additional fees (such as late fees, etc).
State whether the price includes cost of materials or if that will be an additional charge. Articulate who will be responsible for any unexpected costs, etc.
Step 9: Specify how Additions and Subtractions Will be Handled
It is also wise to include how any additions or subtractions can be made in the contract, when they can be made by, and how they will be handled.
Step 10: Arrange for Dispute Resolution
Many states require this, but even if they do not, you ought to include clear information about how any disputes and claims will be handled and resolved. This can help you avoid law suits and litigation.
Step 11: State Your Insurance Coverage & Licensing Information
Clearly state what type of insurance coverage you and your workers will have, as well as when and where from you have attained your license.
Step 12: Create Signature Line
The easiest step of all – create a signature line for your client.
Still Working Toward Your Contractor’s License?
If you are still working on getting your contractor’s license, you should consider how a school can help ensure you get the most relevant information to not only help you pass your test, but run a successful contracting business as well.
At the Contractor’s Institute, regardless of what state you hope to work in, you can gain valuable preparation for your test as well as vital information that you need to operate a profitable contracting firm.
Don’t feel like you must navigate this complex process alone. Get help starting out on a solid foundation.
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