Source: http://garywmoselle.blogspot.com/2015/
Timestamp: 2018-07-20 20:03:11
Document Index: 222751819

Matched Legal Cases: ['§ 24', '§ 8106', '§ 770', '§ 413', '§ 202', '§ 202', '§ 75', '§ 407', '§ 34', '§ 52', '§ 56', '§ 56', '§ 517', '§ 6']

State-by-State Construction Contract Law: 2015
“I saw the same thing happen in auto finance. Class action attorneys go after the deep pockets. The settlement in Coleman v GMAC is typical. GMAC settled for just over $10,000,000.
“Starting next year, solar finance companies will be risking similar treatment if their independent installers continue using these lame contracts.
“My solar company is committed to keeping it clean. We don’t want to be a target. Too many others are inviting trouble. My advice: Either learn to comply with the law or be ready to pay the price.”
Well said. And I agree 100%. Protect yourself. It’s easy. Construction Contract Writer will draft agreements that are perfectly legal, no matter the state and no matter the type of work. The trial version is free.
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A signed and dated written contract
Contractor license or registration number
Date when work will start and be finished
A statement about insurance or bonding
What happens if your contract omits one of these notices and disclosures? In most states, that’s an invalid contract. It’s enforceable against the contractor but almost certainly not binding on the owner. A recent Connecticut court decision makes the point: Aqua-Scapes sued Mason to collect final payment on a pool job. Mason refused to pay, claiming the contract didn’t comply with Connecticut law. The court (2014 Conn. Super. LEXIS 3819) ruled for Mason:
"There is nothing dishonest or sinister about homeowners proceeding on the assumption that there is a valid contract, enforcing its provisions, and later, in defense to a suit by the contractor, in learning that the contract is invalid, then exercising their right to repudiate it."
It’s easy to make Aqua-Scapes’ mistake in a construction contract. What’s required by state law can vary with the contract price, the type of work (residential, commercial or insured loss), where the contract was signed (on site or in an office), the number of payments, when payments are due and even the age of the owner. In the Aqua-Scapes case, the contract was void because it:
Omitted the contractor’s registration number
Wasn’t signed by the owner. The owner gave his OK by email.
Didn’t include starting and completion dates
Omitted a notice of the owner’s right to cancel
Take this as black letter law: If your contract is a dud, the owner wins every dispute. In most states, you’ll have to jump through legal hoops to collect anything the owner doesn’t want to pay.
Bad Faith Contracts
Now go one step further. Suppose the owner spots a defect in your contract right from the start. Something required by state law simply isn’t there. The owner knows you’ll have no right to collect if there’s a dispute. But the owner signs anyhow, saying nothing about the defect – in effect, laying a trap. Heads, the owner wins. Tails, you flip again.
Oops! That owner has given the contractor what’s called a bad faith defense. The owner knew the contractor had no right to collect and went ahead anyhow. That’s bad faith. But proving it won’t be easy. As quoted in the Aqua-Scapes decision:
“Bad faith of a nature to preclude enforcement of [The Home Improvement Act] must involve ‘actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or contractual obligation, not prompted by an honest mistake as to one's rights or duties, but by some interested or sinister motive’.”
Aqual-Scapes couldn’t meet that challenge. You shouldn’t have to. There’s a better way. Use contracts that comply precisely with the law in your state, no matter the type of job. The best way to protect yourself is with Construction Contract Writer. The trial version is free.
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Limited form – A contractor is responsible only for losses caused by the contractor: AZ, CA, CO, CT, DE, FL (public works only), IA, IL, KS, KY, MN, MO, MS, MT, NC, NE, NH, NM, NV (as of 3/15), NY, OH, OK, OR, PA (home improvement), RI, TX, UT, WA
Be aware: I’ve painted with a broad brush. Most states have exceptions and exclusions. There’s plenty more to know. The best way to protect yourself is with Construction Contract Writer. The trial version is free.
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At trial, the jury awarded the Ordings $7,000 in damages. That was doubled to $14,000 under Wisconsin’s Home Improvement Practices Act. A violation of HIPA is also an unfair trade practice which allowed the Ordings to collect their attorney fees, $41,000 in this case. So the contractor was on the hook for $55,000. But that was only the beginning. Everdry’s attorney fees were $118,896. That made the salesman’s promise a very expensive mistake.
Now notice this. The award wasn’t for breach of warranty or breach of contract or negligence in doing the work. Instead, the jury found that Everdry made a false oral promise when selling the job – the Ordings “would never have water in their basement again.”
How many times have you made a promise when selling a job? There’s risk every time you forecast results such as durability, matching colors or textures, performance, a completion date – anything that raises expectations or could be misinterpreted. Let the contract, the plans and the specs describe your task. That’s step one.
Step two is known as a contract integration clause. Here’s a sample taken word-for-word from Craftsman's Construction Contract Writer:
This contract is the entire agreement and constitutes a complete integration of all understandings between Contractor and Owner on the subject of the Project. This Contract supersedes all prior negotiations, representations and agreements, whether written or oral.
An integration clause makes good sense on two levels. First, integration voids statements made before the contract was signed. Those statements aren't part of the deal. Second, courts like integration. Interpreting any agreement is easier when there’s just one contract, not a list of oral promises and side agreements.
Would the jury’s decision have been different if the Everdry contract had an integration clause? I think we know the answer to that question. The Everdry contract did have an integration clause. Unfortunately for Everdry, their counsel didn’t raise the issue until after the jury verdict – too late in the opinion of the appellate court (2015 Wisc. App. LEXIS 275, April 14, 2015).
Are your contracts as good as your work on site? It’s easy to write iron-clad contracts fully enforceable under the law of your state. Get Construction Contract Writer. The trial version is free.
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Colorado Revised Statutes § 24-91-103 reduces the maximum retainage allowed on most public works projects from 10% to 5% on the first half of the project. Thereafter, no retainage is allowed. Prime contractors must distribute funds to subcontractors within 7 days of receipt of payment. Effective June 4, 2014.
Delaware Code Title 10 § 8106(c). A written contract for at least $100,000 can allow suit on the agreement for up to 20 years. Formerly, suit had to be filed in 3 years. Effective August 1, 2014.
Illinois Compiled Statutes § 770-60/21(b) reaffirms the option contractors and bonding companies have to deny payment to subs until the owner pays the contractor. Effective July 16, 2014.
Kentucky Revised Statutes § 413.160 shortens from 15 years to 10 years the deadline for making claims under a contract. Effective July 15, 2014.
Louisiana Revised Statutes Title 14, § 202.1 creates the crime of Residential Contractor Fraud. Criminal conduct includes leaving the job idle for 45 days, a false representation in any application for a permit, not having the required contractor’s license or giving work to an unlicensed subcontractor. Penalties range up to 10 years at hard labor and a $3,000 fine. Louisiana Revised Statutes Title 14, § 202.2 makes it tax fraud to fail to complete installation of a solar energy system or to fail to maintain a solar energy system as required by contract. Effective June 23, 2014.
Mississippi Code Annotated. § 75-24-301 to 311 gives residential property owners the right to cancel a roofing repair contract if an insurance company denies any part of the claim. Effective July 1, 2014.
Missouri Revised Statutes § 407.725 is expanded to give all property owners (not just residential property owners) the right to cancel a repair contract if an insurance company denies any part of the claim. Missouri Revised Statutes § 34.057(1)(1) reduces retainage on bonded public works contracts and subcontracts from 10% to 5%. Effective August 28, 2014.
New Jersey Statutes § 52:27D-123.16, § 56:8-138.2 and § 56:8-142 define home elevation as a form of home improvement and requires that home elevation contractors be licensed and insured. Effective October 1, 2014.
Pennsylvania Statutes Title 73 § 517.7(a)(8) permits time and material home improvement contracts but with very strict limits. See my blog post for details. Effective October 22, 2014.
Rhode Island General Laws § 6-38-2 revises the contract disclosures required any time insulation is installed in an existing building. Effective December 31, 2014.
Texas courts may award damages to a contractor for delay by the owner even if the contract prohibits damages for delay. Zachry Constr. Corp. v. Port of Houston Auth., 57 Tex. Sup. J. 1378. Decided August 29, 2014.
It’s easy to be sure your contracts comply with these and other changes in state and federal law. Get Construction Contract Writer. The trial version is free. If you’re already using Construction Contract Writer, you’ll get a notice when changes in the law affect your contracts.
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