Establishing Contractual Guidelines

Published on September 1, 2011

Don't let your money go down the drain; a good  contract will help prevent it.
Don’t let your money go down the drain; a good contract will help prevent it.

Establishing the wording of your business’ contract for services is very important for protecting yourself, your business and your clients by making it abundantly clear just what services and materials your business intends to provide; when the work is scheduled to commence as well as the projected completion date and what is not included within the scope of the project in question.

Transparency is the key to clarity, understanding and a successful and prosperous future endeavor. However; to assist you in avoiding many common contractual pitfalls experienced by other water feature installation contractors from around the world, we offer the following suggestions and guidelines. *It must be noted here that we are not a licensed practicing attorney nor are we associated with any law firm.* These are simply guidelines and suggestions to bring to your attention a number of possible liabilities that may be of concern. As always, you should contact a qualified attorney of your choice when handling any legal obligations you or your business may face.

To ensure that these contractual concerns are properly addressed, read, understood and acknowledged by your clients, the addition of appropriately titled clauses become necessary and should be utilized in your contract for services. In order to ensure that these additional clauses are verified as voluntarily acceptable by your clients, you should provide a small blank space or short line preceding each clause where your clients can place their initials acknowledging their acceptance of these terms and conditions outlined in each particular clause.

The addition of a clause that states “By initialing each of the following clauses, you hereby acknowledge that you have read, understood and agree to said clause” will assist in the guarantee that no client can later falsely claim that they were unaware of any such clause prior to the commencement of the project in question.

The most common misunderstanding encountered with outdoor projects seems to be the commencement of work and the consequent date of completion. Many contractors fail to adequately account for unforeseen delays caused by circumstances beyond their personal control and fail to adequately convey those potential circumstances to their clients. Though these situations are technically not your fault, a wise contractor should always address these potential issues in an attempt to avoid any later misunderstandings or legal situations.

The most frequent and uncontrollable of these unpredictable delay factors is **weather**. As with any contract uncertainty; you need only provide a clause that addresses the potential issue, thereby clarifying that particular situation. A **weather** clause might be addressed as follows:


(Your Business Name) shall not be held responsible, accountable or liable for any delays in the project commencement, project completion or adjustments in material costs associated with any delays directly or indirectly caused or created by weather, changes in weather or damage caused by weather.

Notice that the above clause not only mentions delays in the commencement of the project but also the completion of the project. This will cover you if you are on another project and the weather slows down progress and you are unable to get to this particular client’s project on the projected start date as well as if you are already on this project and a weather situation fails to allow you to complete the project on the scheduled completion date. Also mentioned are adjustments in material costs. This is extremely important if all of your materials are not on site and a weather delay causes the materials to miss a delivery time or if the delay extends beyond a thirty day price guarantee and you are now forced to pay a potentially higher price for materials that could not be purchased and delivered to the project site due to weather problems. Not only do we address the weather and/or changes in the weather but, just as importantly, damage caused by weather. Otherwise you could be liable for the clean up and repairs to your unfinished project in the case, for example, that strong winds drop several large trees on your water feature project site during the construction process or an extremely heavy rain “floats” a pond liner that has been previously installed over a soil type that does not perk well.

Another issue that can create job site delays, which contractors seldom address until the situation actually happens, is a reduction in your **work force** due to the fact that an employee is unable to report to work. Though this may not necessarily be a contract issue, it can most certainly be addressed here. A **work force** reduction clause might be addressed as follows:

**Work Force**

In the event of a situation in which one or more skilled and trained employees are unable to report to work due to unforeseen circumstances related to serious illness, injury or any other event or situation that may prevent said employee(s) from performing their assigned tasks and duties as outlined in their job description, the client agrees to extend to the company, a reasonable amount of time for the recovery of or possible replacement of the employee(s), whether temporary or permanent, with a suitably skilled replacement.

Take note here that we are attempting to cover all of the bases should an employee, or several employees, become ill, get in an accident, or even get into trouble and get locked up in jail. Whatever the case, you want to be sure that your contract allows you some time to find and/or train a replacement should it become necessary. You do not want to wake up one morning, prepared to complete an important project only to find out your much needed employees are not going to be available to assist you.

**Payments** or a **payment schedule** seems to be the thorn in the side of many contractors who rely on that somewhat steady stream of revenue in order to keep their business in operation with a certain amount of sustainable profitability. After all, you have got to make payroll, order and pay for supplies and don’t forget you need to take care of yourself and your family as well. Although a **payment schedule** can be arranged many different ways and many times these schedules need to fall in line with local and state regulations, here are some ideas to consider when outlining your **schedule of payments:**


The terms of payment for the herein described water feature project shall be as follows: one-third of the total project amount payable as a materials deposit and due at the time of signing this agreement and an additional third paid at the commencement of work with the remaining one-third balance and any adjustments that may have been added with my permission, due immediately upon completion of the project.

The above clause not only gets you a signed, legally binding contract agreeing to the water feature project as designed but also allows you a full one-third of the entire project balance as a materials deposit with which to make your initial supply and material purchases. Then as you and your crew return to the property on the prescribed date to begin work on the water feature project, you are once again given a full one-third deposit as outlined in the above clause, prior to the commencement of work. With this particular payment clause, you have been allowed to purchase the materials for the client’s project with their own money and have not so much as even put a single shovel into the ground and you already have two thirds of the entire project funds.

If you have calculated your budget for the project appropriately, you can never experience a financial loss with this type of set up. All of your business expenses and payroll should be fully covered with these first two one-third payments. You will receive your business’ profit and growth payment with the final one-third balance, once the project has been fully and satisfactorily completed. At the very worst, you will experience a break-even situation, should the client refuse to pay the final payment for whatever reason.
Make sure that you, your employees and your business have authorized permission and access to be on the property where you intend to install the water feature. This may seem unnecessary but you would be surprised at the number of situations that arise because of technical legalities. A typical access clause may be worded like this:


I hereby acknowledge that I am the rightful owner of and legally authorized to give (your business name), their agents, employees and staff, full and complete access to the above listed property for the purposes of designing and installing the water feature as described above, and that it is safe to excavate on the proposed site with regards to underground utilities and/or any other hidden hazards, to the best of my knowledge. I also understand and agree that should any unknown or hidden features be discovered during construction, preventing the installation of the original design and budget, then I will be willing to accept alternative adjustments as determined appropriate.

It is important to notice that not only have you and your employees gained permission from the rightful property owner to be on this site in order to conduct your work but you have established whether there are any underground hazards that the property owner may be aware of. Some states require the property owner and not the contractor to permit the site for excavation. You will also notice that we have adequately covered any situation that may arise where an unknown object might prevent the installation of the project as originally designed. An example would be if you began to excavate a pond and you discover the world’s largest boulder 18˝ underground, right where the pond is supposed to be or perhaps an underground stream that no one was aware of.

Technically and legally without this clause, the property owner can force you to follow through with the project even if you incur great expense in having a demolition crew remove the problem boulder. This clause will protect you against such hidden and unknown situations and has them agree that “if” such an issue should arise, they will let you adjust the design to accommodate the potential problem. Notice also that we do not use the word “change.” That word will scare many of your clients, so we use a softer and more acceptable word…”adjust.”

Remember, should you ever be faced with any legal situation, always contact a suitable attorney of your choice to handle the matter properly. In order to better protect yourself should a legal situation become eminent, it is always best to be on your own home turf in regards to jurisdiction and financial obligations. So to keep your home court advantage, this suggestion was sent in by the good people at Coastal Pond Supply, Atlanta, Georgia:

**Governing Law**
Any project designed and installed by (your business name) for any client, shall be a (your state) contract and shall be construed in accordance with the laws of the State of (your state). Clients, Customers and Guarantor agree that the Magistrate, State and Superior Courts of (your county), (your state), or any other county in which (your business name) may later maintain its principal place of business, shall have personal jurisdiction over them and that these courts shall constitute the proper venue for any action or lawsuit relating to or arising out of this agreement. Client, Customers and Guarantor hereby waive any defenses they may have of lack of personal jurisdiction or improper venue in any such action or lawsuit.

Basically this says that should any legal actions arise from the project you are providing for your client, that they will have to sue you in your home town county and state and not be able to force you to travel to them in order to answer the allegations. It should also be mentioned that those of you that reside or conduct business on or near a state boundary need to take into consideration the laws of all applicable states. Laws available in one state may not be in another.

There are many, many more situations and clauses that can help to keep your business out of hot water and sticky situations. This is intended to address the most common issues brought to our attention throughout the water feature industry.

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