Friday, May 27, 2011

Your Contract Was the Best Money I Ever Spent

A client really said this to me last week.  He said the difference between having my contract now vs. when he had a similar problem many years ago was that now he can sleep through the night.  Here's the story:  client was doing a major construction job for a homeowner.  The homeowner was delaying in making decisions, and the contractor was wondering if he could terminate the contract before making a major outlay for the next step.

He called me, and I looked at his contract, which included the following provision:

"If Owner fails to comply with the provisions of this Contract, Contractor may terminate this Contract and retain any deposit or monies received as liquidated damages, or at the option of Contractor, Contractor may proceed for specific performance or any other available legal or equitable remedies.

Owner will be in default under this Contract if any of the following events take place:

(b)   Owner in any way fails or refuses to perform any provisions of the Contract and the Contract Documents required of Owner."

Since the Contractor could terminate the contract if the Owner did not perform any provisions of the Contract (the homeowners were causing an unreasonable delay), the Contractor was within his rights to cancel the contract.

This situation demonstrates the importance of a good contract. The contract clearly spelled out the Contractor's rights when the Homeowners were not cooperating. This saved him a huge amount of anxiety over an uncomfortable situation.  As we lawyers like to say, "you can pay me now or pay me later, but later is always more expensive."

So, investing in a good contract will protect you if issues arise over the course of your project.  I would also like to add that it was awfully nice to have a client appreciate the work I did for him.