Get it in writing! How to review a contract, part 2

What you should look for in a contract.

Lots of things can be in a contract, but here are the basics.

  1. Who’s a part of this contract? Who’s making agreements as part of it?
  2. What will be done as part of this contract, and who will be doing it?
  3. What happens if something unforeseen comes up?
  4. When are things being done? What things depend on something else being done?
  5. How much will things cost?
  6. How are things being done?

I talked about items 1 through 3 in Part 1 (http://biznik.com/articles/get-it-in-writing-how-to-review-a-contract-part-1). Here, I’m going to talk about items 4 through 6.

 

The example we’re looking at: hiring a contractor for painting and plastering

Let’s suppose you’re hiring a painting and plastering company to do
some work in your office. They’re going to fix cracks, fill holes, and
paint.

 

4. When – start dates, durations, and deadlines, dependencies

What to look for

Make sure there’s a date in the contract for when the work will
start. Also make sure there’s an ending date, or an indication of about
how long the work should take. Make sure all of the dates include the
year, even if you’re talking about the current year.

Make sure that any dependencies in the agreement are specified. For
example, if the contractor must let you inspect certain work before work
continues. Or, that a payment must be made part way through before work
will continue.

Why this is important

The reason for putting in dates is partly so you know when, and how
long, your office will be unusable. It’s also to protect you if the
contractor doesn’t finish the work on time. I’ve seen people in
mediation who waited weeks, even months, for a contractor to come back
and finish work. And because there’s no ending date for the work in the
contract, the contractor could conceivably say that they’ll come back
next week… or next week… or next week… and your business suffers because
you can’t work in your office.

The reason for putting in dependencies is so you know when important
milestones are, and aren’t blindsided with a request for an interim
payment.

 

5. How much – costs, deposits, payment schedule

What to look for

Make sure the contract says how much the work is going to cost. Also,
make sure it says when payments are due. Typically, half will be due up
front, and half on completion of the work. Or the payments might be
divided into thirds, depending on the cost of the work you’re having
done.

Why this is important

This is another one that seems like it ought to be obvious. But I’ve
had clients with contracts that include only an approximate amount. When
the actual cost of the work comes at a much higher, the contractor
pushes them to pay it. I’ve even heard of contractors threatening their
customers. This is a hassle you don’t need.

 

6. How – any more details, specifications, limitations

What to look for (or, “what to put in,” in this case)

Make sure you include, somewhere in the contract, any details or
rules the contractor should know regarding working in your building.
Your building may have rules about hours that work can be done in, or
what days of the week it can be done. For example, between 8:00 a.m. and
4:30 p.m., Monday through Friday. Or, evenings and weekends.

Also, your building may have other restrictions or requirements, for
example, that floor coverings must be put down in common areas, or the
service elevator must be used, or that you must be on the premises while
work is being done. Include all of those.

Why this is important

If your contractors know when they have to finish, they won’t make
noise out of hours, and incur the wrath of your neighbors. Also, if the
building management assesses any penalties for any of the rules being
violated, or damage done to the common areas, you’ll have grounds for
asking the contractor to pay those penalties.

But, of course, you only have grounds for asking the contractor to
pay any penalties, if you’ve let the contractor know what the rules are.
Letting them know is common courtesy, as well as being a good idea for a
contract.

 

In summary: what to look for in a contract

Next time you’re presented with a contract to sign, look it over and make sure it contains these things:

  1. Who’s a part of this contract? Who’s making agreements as part of it?
  2. What will be done as part of this contract, and who will be doing it?
  3. What happens if something unforeseen comes up?
  4. When are things being done? What things depend on something else being done?
  5. How much will things cost?
  6. How are things being done?

If the contract doesn’t contain these things, add them in. Given how
important contracts are, make sure that any contract you sign is a good
one.

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