The No-Contract Contract

Construction contract law can be more than a little complex. Every state has different requirements – notices, disclosures, warranties, waiting periods, penalties. The list grows longer every year as consumer protection laws multiply. What’s a contractor to do?

I’m going to have a suggestion a little later. But first I’ll offer an example of what not to do.

Noelle Tognella of Portland, ME asked Jon Talty of Talty Construction for a quote on home improvements. Jon drafted a proposal -- electrical, plumbing, drywall, tile, carpentry -- and quoted a cost. And that’s when the problems started.

Maine construction contract law for residential jobs isn’t simple. The contract has to set estimated start and completion dates, include a warranty statement, a statement on dispute resolution, a statement on change orders and has to inform the owner about the Maine Attorney General's website. Jon’s contract didn’t have any of that. No problem! That’s because nobody bothered to sign Jon’s proposal, not Noelle, not Jon. So there wasn’t any contract. Perfect. If there’s no contract, Jon hasn’t done anything wrong. Right?

Not quite. As I’ve said more than once in this space, when the job goes bad, you better have a good contract. And you can guess what happened next on this job.

Noelle thought the job was taking too long. She found fault with the quality of Jon’s work. And Jon’s invoices didn’t include the detail she wanted. The “no-contract” contract was changed several times to reflect higher costs and to clarify what work was covered. None of these modifications were signed by both Noelle and Jon.

By November 2016, Noelle had paid Jon $40,000, including $9,000 for work she claimed Jon had not yet completed. She asked for $9,000 back and terminated their non-agreement agreement. When Jon didn’t pay the $9,000, Noelle filed suit.

Maine construction contract law sets a forfeiture of "not less than $100 nor more than $1,000" for each defect in a construction contract. Jon insisted he shouldn’t have to pay. No contract existed. He never contracted to do the work. The proposal he offered was never signed by Noelle.

In short, is having no agreement at all better for Maine contractors than having a defective construction contract?

How Would You Decide the Case?

The Maine court confirmed that Noelle was entitled to a refund for work not completed. And then the court answered the contract question. The “course of conduct between the parties” was evidence of an intent to form a contract. That an agreement was never signed did not protect Jon from requirements of Maine contract law. Jon was found to have committed at least ten violations of Maine law and was assessed a civil forfeiture of $200 per violation. Last month, the appellate court upheld the decision of the trial court.

I agree with the court. Maine contractors have two splendid reasons to draft (and sign) valid construction contracts. First, good contracts add protection if the job goes bad. Second, valid contracts avoid the civil forfeitures written into Maine law.

So here’s a tip for any contractor: No matter where you build, you won’t find a better tool for drafting letter-perfect construction contracts than Construction Contract Writer. The trial version is free.