If you are looking to get any work done on your home, you will find that most service providers operate as contractors. The term “contractor” refers to a professional or agency that does their work primarily through the use of contracts.
The contract is signed by all parties and outlines the goals for the project and the steps agreed upon to achieve them. The benefit of authorizing a service transaction through a contract is that it is a legally binding document that serves to engrave a construction plan in stone, such that no party is able to cheat the system and realize an unjust benefit, such as by refusing to pay for services rendered.
Contracts are especially prominent in construction and home renovation because those activities take a fairly long time to complete, are often quite expensive, and may require a huge amount of planning and details in order to get right.
A contract can provide a clear timetable for a project of any length, can budget and calculate expenses before they are incurred, and can be as long and in-depth as necessary to fully encapsulate all of the necessary details.
However, there is no law requiring a contract. This causes many homeowners to wonder what would happen if they hired a company to do work on their home but did not sign any contract.
Should You Always Have a Contract When You Hire Someone to Work on Your Home?
The simple answer to this question is: yes!
There are a huge number of benefits to having contracts in place when engaging in a long-term business/service transaction. Most construction and home renovation service providers are contractors, and those with your best interests in mind will insist on setting one up before beginning work.
The below reasons are why you should always make sure to review and sign a contract before agreeing to a transaction:
- Specificity: Having a contract in place is the only way to guarantee that the job for which you hired contractors is performed to the exact specifications laid out ahead of time. Without a contract in place, it may be up to the best judgement of the contractors or overseeing managers whether or not to make changes to the plan if unforeseen hiccups arise.
- Consistency: Besides making sure the terms are clear, a contract also serves as a record of events. Home renovation can be a process that takes months or even years, so having your original agreement in writing is a good way to make sure that the plans for the outcome of your home renovation stay solid even if the other conditions or circumstances may fluctuate over time.
- Time: Having a contract in place from the get-go means that you won’t have to spend time during the renovation phase making new decisions or debating specifics with your service provider. The goal for your home is unambiguous and thoroughly outlined from the beginning, so your contractor can start working quickly.
Does the Contract Have to Be a Formal Written Document, or can an Email Conversation Suffice?
An email conversation can indeed serve as a legally binding contract between two parties in the eyes of the law. The law considers any “purposeful agreement of the terms” of a contract to be valid in lieu of an actual signature.
What this means is that, if you have a contract offered to you through email, you don’t have to add your signature to codify it; simply emailing back saying you agree to the terms will hold you legally accountable for the contract.
The verbiage of the email is also relevant in considering its validity as a contract. Words like “accept” and “agree” strongly imply a contract-like nature to the email, and the court will see it as such. As with any other form of contract, it is crucial to read before signing.
If you are not certain about the terms of a contract, or if you aren’t sure whether the document you are being presented with even qualifies as a contract, asking your service provider for clarification is a good idea.
Written Contracts
A written contract is, as the name suggests, a contract whose terms are literally written down as text in a document. The document is signed by all parties who are involved with the contract.
The purpose of a written contract is to provide as clear and unambiguous a method as possible for recording the terms of a contract and dictating methods of execution.
Traditionally written contracts would be printed on paper to act as a physical object that certifies the validity of the contract; however, nowadays many written contracts are distributed and signed online. Both are equally valid, so long as the signatures on the document are valid.
See our full Get It In Writing article for more information.
Oral Contracts
An oral contract is a different form of contract. Oral contracts do not exist as referenceable text on a physical document, but rather only as a spoken promise between two or more parties.
As such, no signatures or authentication can be provided. Oral contracts are legally much weaker than written contracts because of their lack of physicality and the fact that they cannot provide an independently verifiable record of the terms of the contract.
However, this does not mean that oral contracts are not legally binding. Generally, a court will agree that a contract is binding, written or otherwise, so long as the following conditions are met:
- Agreement: At least one party must offer terms that the other party accepts and agrees to
- Consideration: Something of value, principally money, must be exchanged or must be meant to be exchanged
- Intention: It must have been the clear intention of both parties to be held to the terms of the contract
If an oral contract can be proven to satisfy the above conditions, then a court is likely to consider the contract binding.
The biggest obstacle in arguing breach of oral contract is proving your case. Without having anything in writing the court will have to rely on other methods to verify any claims.
Acceptance of Terms by Commencing Work
For homeowners, it is also important to understand how the law views an “acceptance” of the terms. Primarily, note that commencing work as outlined in the contract is considered a an acceptance of all terms, so once your contractor starts work, both he and you are considered to have accepted the terms.
For example, imagine that you hired an electrical contractor to rewire your home. Even if you have not signed the contract, if you allow work to commence, the contract is considered in force and you are responsible for payment and compliance with other terms, as is the contractor.
What to Do if You Haven’t Signed a Contract and are Now in Need of Legal Help
However, an unsigned contract can lead to numerous logistical and legal issues down the line; even if no ill intent was meant. Since the entire purpose of a contract is to have physically documented proof of all parties agreeing to a set of terms, not signing the contract can lead to disputes . If you find yourself in this situation, the best thing to do is get in contact with an attorney with expertise in contract law.
The biggest reason for a court to decide that a contract is not or is no longer enforceable is if the terms are simply too ambiguous and cannot be made reasonably clear. A court will also dismiss a contract if it is clear that one party is being unfairly taken advantage of, or if a party is attempting to hold the other party to ambiguous contract terms that were clearly not a part of the original contract’s intention.
A final option you may have is to argue for estoppel. Estoppel is a legal term. If someone is “estopped” it means that the court will prevent them from going back on their word or asserting something different from what they had previously asserted.
What this means is that if, for example, you had engaged in an oral contract with a roofer to reshingle your roof with a particular type of tile, but they instead cut corners and used a cheaper tile, so long as you can prove that they originally promised the other tile, you may be able to prove estoppel and the court may award you some compensation.
How Do I Avoid All This Trouble?
The easiest and most foolproof way to circumvent the legal quagmire of unsigned contract work is to simply ensure that you and everyone else involved in your project always sign contracts.
Just as important as remembering to sign a contract is remembering to read the contract. It is just as easy to get trapped in a negative contract by not reading it as it is to get trapped out of a positive contract for not signing.
