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Contracts and Contracting

May 12, 2020
If you are in the plumbing or mechanical business today, contracts and contracting is a world in which just about every shop lives.
I read a Contractor e-article the other day, written by Meghan DiPerna, Kenneth H. Lazaruk and Brian A. Shue, about handling the “force majeure” clause in contracts relative to our current situation with the Corona virus pandemic. The ‘force majeure’ clause would have to be invoked because there is no way anyone could have foreseen a pandemic that would shut down the projects. More specifically, they write about the impact the enforcement of the clause will have on contract time lines, extensions and the like, as it relates to completion dates and damages incurred. The lawyers all smiled...

Many contractors, especially small shops and new companies, are either only dimly aware of the force majeure clause or dismiss it out of hand as “it’ll never happen here.” Well, here it is!

If you are in the plumbing or mechanical business today, contracts and contracting is a world in which just about every shop lives. Even service work involves a contract, albeit an unwritten one most of the time. In times past, many small projects were done on a handshake, which itself is an informal form of contract, between honorable people. Sadly, those times are past. Today, every project involves a written, legally binding, contract that clearly delineates the responsibilities of the parties entering into it.

This column is a cautionary tale for every one of us, yours truly included; read every single line of every single page of any contract you sign! You might be surprised by what you are agreeing to! More importantly, you will be legally bound by your signature to the terms and conditions of that contract, and in court or arbitration, there is no “wiggle room” or “that’s not what I agreed to.”

Years ago, I had the privilege to teach a night class at a local junior college for a couple of semesters. When I taught contracts and contracting, the one thing my students had drummed into their brains is this: no contract presented to you for signature by a client, no matter how cordially, was written to protect you! Think about that. Every contract ever written has one thing, and one thing only, as it,s prime directive which is to accrue to the advantage of the person presenting the contract—whether that is the general contractor or owner—not to the subcontractors.

How many times have you been presented with a contract that has four or five pages of “boiler plate” terms? Have you been told, “you can’t change the boiler plate terms and conditions”? Why do you think that is?

First, read the boiler plate. You will find things like “pay when paid” clauses (which have been found to be illegal and unenforceable in many states). You’ll also find things that make errors of omission on the part of the architect, owner or general contractor YOUR responsibility! Think I’m kidding you?! I’m not.

As far a “you can’t change the boilerplate” is concerned... you can. If you object to the boilerplate terms, the general may tell you that you won’t get the job if you don’t sign the contract “as is,” but you can strike or alter any clause in the contract if you disagree with it. Whether you’ll lose the job or not? That may be true, or it may not be true. You’ll have to decide if you have the backbone to stand up for yourself or crumble in the face of possibly losing a job.

If you crumble, remember this: the general (or contract holder) now has you bracketed. You can look forward to fighting for every change order or schedule conflict for the remainder of the project. You might also have to beg and plead to get paid timely. That’s just the way it is when you bow to “you can’t change the boiler plate.”

If the terms and conditions they present to you are so onerous that you feel you can’t agree to them, why on earth would you move ahead? You can object to the boiler plate. You might want to have an attorney do the objecting, but that’s just window dressing (although the general might more readily agree if a lawyer gets involved... but it’s not necessary). You know what you can tolerate and what you can’t. If they tell you that you won’t get the job if you don’t sign the terms and conditions without alteration, walk away if you can’t abide them. Much better to pass the project than to spend it at the mercy of those who do not have your best interests at heart.

If you are thinking that my advice is given by the ton but taken by the ounce, let me suggest this; If you have gotten to the place, in any project, where you have been offered a contract, remember that general has spent a lot of time bidding or negotiating that project. The budget, schedule, fees and plans have all been satisfied and it is ready to go. Remember the old adage, time is money? To have a prime subcontractor (plumbing, mechanical, fire protection, electrical) refuse to go to contract at this point is something most general contractors do not want to deal with, especially if it is over questionable contract clauses.

Since we all “live and die” by the contract on these projects, you as a subcontractor need to know what you can live with and what you can’t and deal accordingly. No general contractor that I have ever worked with cared an iota about the financial liquidity of the subcontractors, except as it impacted the sub’s performance on their project.

In point of fact, we all have seen many, many subcontractors fall by the wayside because they did not have what it took to stand up to and work with the general contractors with whom they contracted. Those that survived did so by recognizing that their best interests, not the general contractor’s were what they needed to worry about. Contracting is a tough business, minimizing that fact will get you in trouble faster than anything else you might do.

The Brooklyn, N.Y.-born author is a third-generation master plumber. He founded Sunflower Plumbing & Heating in Shirley, N.Y., in 1975 and A Professional Commercial Plumbing Inc. in Phoenix in 1980. He holds residential, commercial, industrial and solar plumbing licenses and is certified in welding, clean rooms, polypropylene gas fusion and medical gas piping. He can be reached at [email protected].

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