Here are some of the things you should be looking at, and what you should be aware of.
1. Be aware of contract integration. Generally speaking when parties sign a contract after negotiation, the contract is deemed to control and anything that may have been talked about but does not appear in the contract is not binding. So if time is an issue and Joe has promised that the job will be finished in two weeks, make sure that that is in the proposal that you sign.
Nothing that you were told; nothing that you were promised; nothing that you thought you undertood… matters if it’s not in the final written agreement. Remember, if this ends up in court the judge will look at the written document and will not consider what Joe may or may not have told you.
2. Look for clauses that are favorable to only Joe and his company and impose unreasonable obligations or conditions on you. Here are some things to look for…
A. Limitations on liability. These may take the form of warranty limitations, such as in this case, excluding responsibility for the actual shingles. They may also attempt to limit liability for consequential damages, such as damage to your furniture or the structure in the event there is a defect in materials or installation of the roof. It will not be much consolation to you if the new roof is bad, that Joe replaces some shingles, when it fact the defect has destroyed your new living room furniture and home entertainment system.
B. Indemnification. These are clauses found more and more in printed contracts where you would agree to hold Joe harmless from any loss of any kind related to the contract or its performance These can be brutal in that they shift all of the risk of loss to you and away from Joe, even if it is his fault. Any such clause should be either deleted, or at the very least, be mutual and reasonable in scope.
C. Be careful of clauses that define where any disputes will be litigated (jurisdictional clauses). While you probably won’t run into this with a small, local business, but if it a large company, or is a franchise operation, be careful. If you live in Florida you really don’t want to sign a contract that provides you’ll litigate any disputes in Omaha! And if there’s an arbitration clause (very common nowadays) do you really want to have your dispute decided by arbitrators from the American Roofing Association?
D. Who are you contracting with? If it’s a major company, this may be very clear. But what if Joe is a one horse show but has been set up as an LLC? Do you really want to sign a contract with an LLC that may have no assets whatsoever in the event things go south? Of course not. In a case such as this it would not be unreasonable to add to the parties Joe’s Plumbing, LLC and Joe personally! You may think Joe would refuse to agree to that, but you’d be surprised…. He wants the job and will not have a good answer when you counter his objection with: “I don’t understand – are you saying you’re not going to stand behind your work?”
3. Look for missing parts as well.
The “proposal” was prepared by Joe, or his lawyer, or if it’s some kind of franchise, the company’s lawyers. Be assured there will be very little in the agreement in your favor. It is up to you to make sure you are protected.
Here are some of the things you might want to make sure are included:
1. Time to complete. This is one that service providers often conveniently forget. How long does Joe have to get the new roof finished? If you don’t think this is important, ask yourself how long do you want to deal with a blue canvas tarp covering your house?
2. Penalty clause for not finishing on time. You should specify what happens if Joe drags his feet. Consider a daily penalty after a certain date…. It will provide some incentive to Joe to get the roof done instead of leaving it while he goes off to sign up another job.
3. Damage and repair to your property from the work. What happens if Joe’ workers break or damage the roof framework? Crush your wife’s flower garden? Destroy a part of the lawn?
These are just a few of the things you need to look at instead of doing what far too many people do – just signing the proposal when presented without looking at all the fine print on the back and believing that it doesn’t matter, because “Joe told me it would be ok”.
When going through the proposal do not be afraid to insist on changes to the form. Roger Dawson a negotiating guru refers to the power of the printed form.
Businesses rely on the assumption that once a form has been printed it is somehow etched in stone and cannot be changed. You may even encounter this with Joe – if you request deletion or insertion of a condition, for example the two week completion. He may say something like “you know these are the forms we are required to use and we’re not allowed to change them, but I promise you, we’ll get it done in two weeks”. You response is simple – just take a pen, write in the margin, or wherever there is space “project will be completed within two weeks of commencement” initial it and demand that he do the same. Viola!! You’ve changed the “printed form”! Don’t be afraid to do this.