I’m having some work done at my home, which includes removing the 1980s paneling in my living room. We knew the house had been “worked on” a number of times before we bought it, but imagine our surprise at finding this:
What if you’re the contractor and you have a fixed price contract to remove the paneling from our home and finish the drywall underneath. If your contract doesn’t have a provision allowing for extra pay for hidden conditions, you just lost a big chunk of your profit for the job remediating a condition that was both hidden and not one which one would normally expect to encounter in a project of this type. Now, imagine it’s a 500 unit apartment complex and there’s no drywall at all behind the paneling. The job just went from profitable, past break even, to a money pit.
This scenario is easily avoided by including a provision in the contract that you the subcontractor are entitled to a change order should you be required to perform extra work as a result of a hidden condition which could not reasonably have anticipated prior to start of wok. However, this means you’ll have to read, or have your attorney read, the contract and propose whatever reasonable changes are needed to protect your interests.
Of course, uncovering hidden conditions is but one of many provisions you need to have included in your contract. Reasonable payment terms, waiver of consequential damages, fair notice provisions and indemnification obligations are a few of the others. If you can’t afford to do the job for free, we strongly recommend having every contract professionally reviewed prior to signing it. If the owner or general contractor refuses to negotiate the terms of the contract, you may want to reconsider undertaking the risks contained in the contract. Picking up new work is great; getting paid for that work is even better!
© Karen Ensley and Brian Benitez, Ensley Benitez Law, PC, 2023. All rights reserved. This article is provided for educational reasons exclusively and is not meant to be construed as legal advice. Ensley Benitez Law, PC, will represent you only after being retained and that agreement is made in writing.