The Pitfalls of Working Without a Contract: A True Personal Story

contractor signing contract Considering working with a friendly contractor sans a contract? Think again.

Contracts are extremely important in all working relationships, whether you are working with a friend or a new professional. They protect both parties from potential conflict, and ensure that the project is completed successfully and everyone is happy. Still need convincing? Hear a personal account of our partner Thumb and Hammer’s experience working without a contract.

Several years ago, I discovered some structural damage to an exterior wall. I hired a contractor that was recommended to me by my real estate agent and I was satisfied with his work. It was not a complex job—we agreed on a price, went to the lumberyard to pick up materials and he completed the job the same day. In fact, I was so impressed with his work that when he gave me his card advertising complete renovations, additions and basements, I decided to talk to him about finishing our second floor, which was completely gutted at the time. The conversation went something like this:

I asked, “About how much would it cost me to have you completely finish the second floor?”

“I could do that for you for about $X,” he replied.

I said, “When can you start?”

And with that, he was hired. For some reason, we never bothered with a contract. He started the job on the day that he promised and everything progressed well. I paid him in installments whenever he requested, and paid extra when he did extra work. The lack of a contract did not seem to be a handicap.

As the project neared completion, however, our relationship broke down. It turned out that we had different definitions of “completely finished.” Painting, hanging doors and installing trim were not included in his original price, or so he claimed. The additional price he gave for those jobs was so steep that it was obvious he was either trying to make up for under-estimating the original job, or he just wanted to cut ties completely. Whatever the case, I ended up being left with a lengthy punch list—more work and expense for me.

A handshake agreement was risky enough for the simple same day repair but when it came to the larger project, not having a written contract was downright foolish. I certainly feel fortunate that I didn’t suffer more serious consequences as a result. A proper contract would have defined all the elements included in the job (as well as what wasn’t included), guaranteed the price, and set the payment schedule. We could have negotiated change work orders for any additional “while you’re at it” work as it came up. And we would have avoided the dispute over what constituted the “finished” job. Having a written agreement in place before work began would have avoided disagreements later.

Elements of a good contract

• Contractor’s contact information: address, phone, and license number
• Buyer’s contact information
• Description of the project, what is included, what is not included
• Description of materials and who supplies the materials
• List of any subcontractors
• Contract price
• Payment schedule (usually based on milestones)
• Start date
• Finish date
• Provisions for how change orders will be handled

These elements were culled from a sample contract that can be found at the NYC website.

The author is the Webmaster of Thumb and Hammer, a home improvement website geared towards do-it-yourselfers and weekend handymen.

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