“Will you look at my contracts and make sure they are good?” Our attorneys hear this frequently from contractors. So what does a good contract look like?
First, every contract is different. What works for some industries may not work in others. That said, several basic items should be addressed in every landscape installation contract.
Scope of Work. What will you be doing for the customer? What type of project is it? Be specific. The scope of work for each contract should be different and apply specifically to that customer and project. Let’s use a patio as an example: if you’ll be installing Holland pavers, state that in this part of the contract. Better yet, state which manufacturer will make the pavers, and what color choice you’ve agreed upon with the customer. Is the installation based on a landscape plan? If so, reference the plan. Will there be a soldier course? How about sand―regular or polymeric?
As you can see, there are many details which may seem inconsequential now, but could be important later. Writing it all out at the beginning will protect you from “he said, she said” later on if the project breaks down.
One great option is to attach the agreed-upon proposal to the contract terms and conditions. Reference the proposal number, date, or version at the beginning of your terms and conditions to maximize clarity on what materials and work are being accepted.
Changes. It happens on every job: the landowner loves the work but wants to make some “(not-so)-minor” adjustments to the original proposal. Whether it’s adding a few square feet to the paver patio or changing the edging lines, changes should be documented in writing. Adding a Changes clause in your contract will provide some guidance when changes are requested. Will you require all changes to be in writing, or just changes over a certain value? What about change approval? Can anyone order/authorize changes or is it a designated person or property manager? How will you handle situations where the wife signs the contract but the husband asks for changes during construction? All of these possibilities should be considered.
Another important question: will changes require a signature? Many stock contract forms state that all changes must be in writing and signed by the parties. This is fine if you intend to conduct business that way, but in reality, taking the time to get an owner’s signature before working on changes may delay installation. One alternative is to require that changes be approved in writing (email, text, or written out) but not necessarily signed. The owner can then send you a quick approval email in response to a quote for changes.
Regardless of how you decide to handle changes, it’s important to have a process in your contract and then follow that process exactly. Save all emails and texts from customers showing approval of changes in case there are future disputes.
Permits and Utilities. Are permits needed to do the job? If so, who’s responsible for obtaining and paying for them? You should also address utility locations. Who’s responsible for marking utilities (specifically the ones that Gopher One-Call doesn’t mark, such as low-voltage lighting, irrigation lines, invisible fencing, etc.)? Make sure to address these items so you’re protected later if your crew happens to find an unmarked irrigation line.
Payment. How much are you charging the customer? How much of a down payment is required to start work? Will there be scheduled payments along the way, or will the remainder be paid once work is finished? If you charge late fees, interest, or other collections costs such as attorneys’ fees, that should be in writing as a part of your contract.
Pre-Lien Notice. If you aren’t paid for your work, placing a mechanic’s lien on the property is a good way to achieve payment. Minnesota law provides specific language that must be delivered to a customer in order for the contractor to later place a lien on the property. One of the best ways to deliver this notice to the customer is by putting it in your contract. If you don’t have the exact statutory language, you could lose your lien rights. I’m happy to provide that language for free upon email request.
Contracts in General. Written contracts can minimize confusion when project disputes arise. While these five clauses contain important things to include in your contract, there are lots of other important items. Ultimately, remember that the usefulness of your contract depends on whether your business practices match what the contract says. Be sure to review your contracts annually and compare their terms to what you do in practice.