All states tip the playing field in favor of property owners who contract for residential work. Nearly every state requires very specific notices and disclosures in residential construction contracts. Even the slightest defect in an agreement can have consequences – fines, revocation of a license, charges for attorney fees, no right to collect or even jail time. All of these penalties fall on the contractor. The property owner gets a free ride.
Penalties for a using a defective contract are different in every state. Some states, such as Hawaii, simply make the contract unenforceable. The contractor collects nothing. See my blog for December 17, 2009. Other states give the contractor the right to collect some part of what's owed, though not the full contract price. The case of Al-Jundub v. Ardizzone Enterprises (March 2010) puts Indiana in that category. I'll explain.
A storm in March 2007 did some damage to the exterior of a home in Plainfield, Indiana. The owner, Amjad Al-Jundub needed a contractor to make repairs. John Rumpel at Ardizzone Enterprises sent Al-Jundub a signed proposal for doing the repairs – at a cost of $11,761.80. Al-Jundub signed the proposal and faxed it back to Ardizzone. As simple as that, Ardizzone Enterprises was hip deep in trouble. Here's why.
Indiana's Home Improvement Contracts Act requires ten very specific disclosures in home improvement and home repair contracts, even for small jobs like siding, painting, fencing and landscaping. A home improvement contract that omits any of the ten disclosures isn't enforceable under Indiana law.
In this case, Ardizzone Enterprises made a major mistake. Two of the ten disclosures were missing: the starting date and the completion date. And there was no written agreement on changes to the work. That made the contract unenforceable.
Ardizzone Enterprises finished the job. Al-Jundub wasn't happy with the work and refused to pay – not even a dime. Ardizzone Enterprises sued and the court agreed with the home owner. Ardizzone Enterprises has no right to collect under a contract that doesn't comply with Indiana law.
But the Indiana court wasn't done. There's a legal principle called quantum meruit. That's Latin for "as much as he deserved." In this case, the Indiana court decided Ardizzone Enterprises deserved $10,761.80, a thousand dollars less than the contract price. John Rumpel's mistake in drafting the contract earned Al-Jundub a $1,000 discount.
Moral to the story: Don't leave it up to a court to decide how much you deserve. Use iron-clad forms enforceable in your state. It just makes sense. The site Construction-Contract.Net has sixteen sample contracts for every state. All comply with state law and all are available for free download. If you make a living as a construction contractor, I recommend ConstructionContractWriter.com.