Contractor Work

Question:

I’ve been working for months to make a deal with a contractor. I think we have agreed to terms. He said he would send over an agreement to sign, but he has not done so yet. I want to get started on the project. Is it OK if we start the work? Do we have to have a contract? I don’t want him to get mad if I ask or think I’m going to sue him because I keep asking for a contract.

Answer:

Lawyers are experts in the law, but you are an expert in the facts. Meaning you have the business relationship with this individual, and you should trust your business judgment. That said, a written contract is a very valuable tool and I recommend you take all steps you can to get the contract put together and signed by all parties. Having the terms of the deal put together in writing helps set everyone’s expectations and reduces the risk of miscommunications and misunderstandings. If everyone really is on the same page, then nobody should have an issue putting all the agreed-upon terms in writing. You may want to hire an attorney to go over the draft contract when they send it over. Typically, the party drafting the contract will do so in a way most favorable to them – so you’ll want to read it carefully and negotiate any provisions that seem unreasonable. Here are some provisions to look out for An attorneys’ fees clause – something along the lines of “the party prevailing in any action is entitled to recover attorneys’ fees.” This is important because it is the basis for you to recover attorneys’ fees if you ever have to sue the other side for breach of contract. Without a written attorneys’ fee clause, you will likely not be entitled to recover fees in any lawsuit. Even if you won the lawsuit, without that type of clause, the other side would not be responsible to repay any of the attorneys’ fees you spent. An integration clause – something along the lines of “this is the entire agreement” – this clause tells the judge that the parties’ entire agreement is what is written in the contract. So, if they email you on the side saying, “paragraph 4 says $4/hour, but we’ll pay $5,” or “Don’t worry about paragraph 6, we won’t enforce that,” or anything along the lines of a side, deal or promise, none of that will be taken into consideration by a judge. The integration clause says that the ENTIRE deal is on the paper…so make sure that you agree with and are comfortable with exactly what is written. No more and no less. And make sure all agreed-upon terms are written out. A choice of law/dispute resolution provision – this may say that all disputes need to be taken to arbitration, not court. Or that if they go to court, they must be in a specific County or heard under a specific state’s law. If the contract says all disputes must be heard in arbitration in Ohio, but you’re in California, that is a concern. Be prepared that if the other side breaches the contract, your recourse will be to seek arbitration in Ohio.