Patent Document

[0001]     This application claims the benefit of U.S. Provisional Application No. 60/624,087, filed Nov. 1, 2004 and U.S. Provisional Application No. 60/649,595, filed Feb. 4, 2005. 
     
    
     BACKGROUND OF THE INVENTION  
       [0002]     This invention relates to methods and processes for preparation of contract documents, monitoring of contract progress and authorizing payment of funds for performing on contracts. The new method and system may use a central operating and data base element for creation of contract documents, for transmitting a contract document with instructions for executing or signing the contract document, for electronic signature of a contract document, for recording contract performance and for authorizing and paying funds for contract performance. The method and system may allow preparation of various status reports by users to monitor multiple contractor or subcontractor activities associated with contracts.  
         [0003]     The existing methods and systems for contract process, particularly in the construction industry as for example the lien waiver documents associated with construction loans, may be cumbersome and time consuming as much of the process may not be automated. As an example, when a contractor obtains a construction loan with an FDIC chartered bank the lender is subject to strict FDIC guidelines. One problem for banks, examiners, title companies, contractors and others may be facilitating lien waiver for a construction project throughout the loan period. The lien waivers are required for subcontractors, suppliers and others who may be paid from loan funds for work on a construction project. This may protect the FDIC and banks collateral for a loan to avoid fraud.  
         [0004]     There may be three ways to obtain a signed lien waiver for work performed. One method may be to hand deliver a payment to a subcontractor or supplier and obtain a signature on a lien waiver document at the same time. Another method may be to mail a check or pay by credit card telephonically or on the Internet. The lien waiver may be mailed or facsimiled to the subcontractor or supplier for them to sign and return the document. This may require a trustworthy subcontractor or supplier to return the document. Yet another method may be to put the lien waiver wording on a check for payment and use the cashed check as agreement to the lien waiver. This method may be of questionable legality.  
       SUMMARY OF THE INVENTION  
       [0005]     The present invention is directed to systems and methods for contract preparation and performance payment. A request for performance may be initiated to a provider by a buyer. A contract may be created by a provider at a first system terminal of a central operating and data base element for the performance. The contract may be transmitted with a signing instruction to the buyer. The signing instruction may be implemented to log on to a system terminal and to enter a user identification for reviewing the contract and for signing the contract. The contract may be performed by the provider and a bill may be transmitted to the buyer at a system terminal. A payment may be released for the contract to the provider at a system terminal.  
         [0006]     These and other features, aspects and advantages of the present invention will become better understood with reference to the following drawings, description and claims. 
     
    
     BRIEF DESCRIPTION OF THE DRAWINGS  
       [0007]      FIG. 1  illustrates a graphical representation of the contract execution system according to an embodiment of the invention;  
         [0008]      FIG. 2  illustrates a flow diagram of a process according to an embodiment of the invention;  
         [0009]      FIG. 3  illustrates a lien waiver instruction according to an embodiment of the invention;  
         [0010]      FIG. 4  illustrates a lien waiver document according to an embodiment of the invention;  
         [0011]      FIG. 5  illustrates a data base report according to an embodiment of the invention;  
         [0012]      FIG. 6  illustrates a data base report according to an embodiment of the invention;  
         [0013]      FIG. 7  illustrates a data base report according to an embodiment of the invention;  
         [0014]      FIG. 8  illustrates a data base report according to an embodiment of the invention;  
         [0015]      FIG. 9  illustrates a flow diagram of a process according to an embodiment of the invention;  
         [0016]      FIG. 10  illustrates a change order document according to an embodiment of the invention. 
     
    
     DETAILED DESCRIPTION  
       [0017]     The following detailed description represents the best currently contemplated modes for carrying out the invention. The description is not to be taken in a limiting sense, but is made merely for the purpose of illustrating the general principles of the invention.  
         [0018]     Referring to  FIGS. 1 and 2 , a contract execution system and process  10  may have a central operating and data base element  20  that may be operated by a bank, escrow company, lending institution, funds handling entity or like business or service organization. A user  12  that may be a contractor  40 , a subcontractor  42 , a buyer  44 , a lender  46 , a bank examiner or the like contracting entity who may then interact with the central element  20  to enter into contractual agreements and to execute elements of contractual agreements, for example, payment for work performed, execution of lien waiver documents, documenting changes to a contract, payment for change orders as well as other contractual elements.  
         [0019]     The user  12  may access the central element  20  from system terminals  14  that may be remote and that may be data terminals at banking or other business entities, remote terminals linked to the Internet or other network systems, telephone system terminals or voice devices, blue tooth communication systems and the like. These remote terminals  14  may be linked by wire, radio wave, satellite, infrared or other transmission methods. Mail and courier type services may also be used for some elements of a contract process  10  where electronic methods may not be available or efficient for a particular user  12  or system operation.  
         [0020]     In use the contract execution system and process  10  may have a distributed central operating and data base element  20  as for example a bank and an escrow company may manage certain portions of the process and coordinate maintenance of the data base for various contract processing functions. An example of a use of the system may be the funding of a construction process as illustrated in  FIG. 2 . A contractor  40  may obtain funds  50  from a lending institution such as a bank  46  or may be self funding. The contractor  40  may hire subcontractors  42  to perform work  52  on the construction project. Once the subcontractor  43  has completed the work a bill for payment  54  may be submitted. These steps or actions may all be taken without the parties meeting. For example, the contractor  40  may have a relationship or agreement with a bank  46  to prepare loan documents electronically at a terminal  14  that may then be processed and approved at the bank  46 . The subcontractor  42  may be on an approved list of companies for work for the contractor  40  and a work order or contract may be electronically transferred from the contractor  40  to the subcontractor  42  who may then use an electronic signature to sign the contract. The approved list may be based on a rating system reflecting a subcontractor&#39;s  40  performance history, as an example, lien waiver completion action and job performance. Once the work is performed the subcontractor  42  may submit the bill  54  electronically to be received electronically  56  by the contractor  40  who may normally be the payer of the bills, or other entities  58  that may be designated, such as, an accountant, a bank  46 , or an escrow company. All of these transactions may be maintained in a database  22  of the central operating and data base element  20 .  
         [0021]     The contractor  40  may authorize payment of funds  56  by the contractor&#39;s bank  46 , an accountant or other designated entity based on the work performed and conditioned on the subcontractor  42  signing a lien waiver. The contractor  40  may prepare a lien waiver document with instructions  60  to be transmitted electronically to the subcontractor  42 . The contractor  40  may authorize payment of funds  56  to the subcontractor  42  conditioned on receipt of a signed lien waiver  64 . The instructions  24  and lien waiver document  26  may be as illustrated in examples in  FIGS. 3 and 4 . The instructions  24  may contain an electronic address such as an Internet web site and user identification that may be a pass code or password to allow access to the central element  20  for the subcontractor  42  to review the lien waiver  26  and to electronically sign or agree to the document  62 . If an electronic notary may be necessary, this may also be accomplished with the signing. While the embodiment discloses the contractor  40  as preparing documents and verifying payments, other entities may also be authorized to do so, for example, if a lender such as a bank  46 , title company, escrow company or the like may be involved in the transaction, they may prepare lien waiver forms and signing instructions and transmit them as well a verifying receipt of documents.  
         [0022]     If the subcontractor  42  may not have their own terminal access for performing  62 , they may have access arranged through their own bank or an escrow type entity, they may use the bank  46  that may be part of the system, or they may use other types of electronic service providers. Other types of execution methods may also be used, for example, the lien waiver and instructions  60  may be transmitted by mail or courier to the subcontractor  42  with user identification information and the subcontractor  42  may then use a voice or text system such as a telephone to authenticate themselves and execute the lien waiver  26 . The transaction data may be entered in the database  22  by a contract execution system manager that may be a bank  46 , an entity that may operate contract execution type systems, or a contractor  40 , by personnel conversing with the subcontractor  42 . For more sophisticated voice systems, as an example, a voice recording may be used to authenticate acceptance of a lien waiver  26  that may eliminate personal contact with contract execution system manager personnel. Other electronic identification may also be used, for example, biometric identification may be used that may be electronic fingerprint or eye identification type systems.  
         [0023]     When the subcontractor  42  signs the lien waiver  62  the central element  20  may recognize this event  64  and depending on the remote terminal  14  capabilities of the subcontractor  42 , an electronic check may be produced or enabled at a local terminal that may be printed, an electronic funds transfer or direct deposit may be effected, a check may be mailed, or other manner of payment initiated  66 . Receipt of payment  68  may be confirmed  70  electronically or by return of a canceled check, receipt or other document. The completion of the subcontractor  42  transaction may then be entered  72  in the data base  22 . This process may be used with multiple subcontractors on one or more construction projects for the contractor  40 , lender  46 , inspectors and others to monitor progress of projects and correlate payments to lien waiver status. Depending on the control of the central element  20 , that is, contractor  40 , lender  46 , or other entity, access to date in the database  22  may be authorized for users on a need to know basis. For example, a contractor  40  may be allowed access to data associated with its subcontracts as a means for tracking work progress, payments, lien waiver history and other information. Examples of possible types of reports are illustrated in  FIG. 5  through  8 .  
         [0024]     Referring to  FIGS. 1 and 9 , the contract execution system and process  10  may be used for other elements of contracting to develop documents and confirm execution of agreements or performance to validate payment for work, services or products. A party wishing performance such as a buyer, a seller or a payer wishing a performance may contact a provider such as a contractor  80 . The provider may create a contract document  82  as for example a change order for a construction contract or purchase order on the central element  20 . The contract document may be transmitted with instruction  84  for the buyer to review and sign  86  the contract document, for example, change order or purchase order similar to steps  60  and  62  as described herein for the lien waiver process. Once the contract may be performed by the provider a bill may be submitted to the buyer  88  and payment may be released by the buyer  90  similar to step  66  as described herein for the lien waiver process. Contract performance payment between the parties may involve other than money payments, for example, the provider may perform and the buyer may pay by performing an agreed service or commodity exchange as payment. The users of the central element  20  may control or establish reports to provide contract status information similar to that described for use in the system for the lien waiver process. The results of the transaction may be entered in a data base  92 . While this embodiment has been described for a transaction involving a contractor performance, the provider  80  may be a seller or other entity wishing to contract with a party wishing a type of performance, for example, a joint venture, a sale or other type of transaction in which the electronic contract system and method may be applied.  
         [0025]     While the invention has been particularly shown and described with respect to the illustrated embodiments thereof, it will be understood by those skilled in the art that the foregoing and other changes in form and details may be made therein without departing from the spirit and scope of the invention.

Technology Category: 3