PROTECTING YOUR BUSINESS
Why You Need Contracts, Not Handshakes
By Jill Odom
WHEN YOU’RE ON THE SMALLER SIDE OR WHEN YOUR BUSINESS IS SIMPLY mowing lawns, you may think contracts aren’t necessary unless you’re working for a large commercial customer or general contractor.
However, failing to utilize contracts for
your jobs can leave your company wide open to lawsuits and leave you with no legal recourse if a client fails to hold up their end of the agreement. “Contracts establish certainty,” says
Richard Lehr, Esq., of Lehr, Middlebrooks and Vreeland and NALP HR and legal advisor. “You reduce the risk of a misun- derstanding as far as what the client’s expectations are and what the contrac- tor will provide. It’s to avoid the risk of a misunderstanding, which creates the risk of non-payment, which also creates the risk of litigation.”
Even if you have contracts for custom-
ers to sign, if you aren’t careful about the clauses and wording included or lacking in the contract, you can still leave your business vulnerable.
COMMON MISCONCEPTIONS AND MISTAKES
One major misconception is that a
generic contract found online will be sufficient for your needs. Patrick Murray, co-founder of Local Roots Landscaping, based in Pittsburgh, Pennsylvania, says when they were smaller, they were burned by using
one of these generic contracts, which included the phrase that “the customer agrees to pay in full upon completion of the project and total satisfaction from the client.” “We found this contract online and we
went to court over it,” Murray says. “They weren’t satisfied and that was literally the line we lost on. I think it was $10,000 at the time because they weren’t satisfied.” Lehr adds that run-of-the-mill con-
tracts found on Google typically aren’t enforceable in a contractor’s state. “Seek legal advice,” says Niwar Nasim,
president of Nasim Landscape, based in Puyallup, Washington. “It will cost some money, but it will be well worth it in the event that you ever run into an issue where you need it.”
“Contracts establish certainty. You reduce the risk of a misunderstanding as far as what the client’s expectations are and what the contractor will provide. It’s to avoid the risk of a misunderstanding,
which creates the risk of non- payment, which also creates the risk of litigation.” - Richard Lehr, NALP HR and legal advisor.
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