“My company is based in Kansas. But I
build in Missouri too. Can I use my KS contract on construction projects in MO?”
Good question. The answer is “No.” But
it takes some explaining.
Contract law lets people decide where
and how disputes will be settled – which court (the forum) and which state law (choice
of law) will apply. If the contract makes reasonable decisions on forum and choice
of law, courts will usually enforce the agreement as written. For example, the following
would usually be a good choice: the state where the contract was signed or where
goods were delivered or the home state of the vendor. On that basis, a Kansas contractor
could use Kansas contracts on Missouri jobs. But keep reading. Construction contract
law is different.
Most states require that disputes about
construction in that state be settled by a state court applying law of that state.
Twenty-six states fall in this “home rule” category: AZ, CA, CT, FL, IL, IN, KS,
LA, MN, MT, NC, NE, NM, NV, NY, OH, OK, OR, PA, RI, SC, TN, TX, UT, VA, and WI.
In those states, decisions about forum and choice of law are made for you. Anything
to the contrary in your contract is a waste of time.
“OK,” you say. “But MO isn’t on that
list of 26 states. Doesn’t that mean my KS contract will work in Missouri?”
The answer is still “No.”
Most of the other 24 states, including
Missouri, follow § 187(2) of the Restatement (Second) of Conflict of Laws, "The
law of the state chosen by the parties to govern their contractual rights and duties
will be applied...unless...(b) application of the law of the chosen state would
be contrary to a fundamental policy of a state which has a materially greater interest
than the chosen state in the determination of the particular issue." Following that logic, no Missouri
court has ever applied the law of another state to resolve a dispute about construction
in Missouri.
“Fine. But I’m not trying to use Kansas
law or Kansas courts to settle disputes on my Missouri jobs. I just want to use
the same basic contract on all my jobs. Can I do that?”
Again, the answer is “No.”
Every state requires very specific notices
and disclosures in construction contracts. Nothing in your contract about forum
or choice of law is going to change the law at your construction site.
If your Kansas contract is legal, it
includes several of these KS notices. All will be worthless on a Missouri job. For example,
the notice required by the Kansas Residential Construction Defect Act does nothing
on a job in Missouri. Terms required by the Kansas Fairness in Private Construction
Contract Act are irrelevant in Missouri. The arbitration notice required by Kansas
law is rubbish in a contract for construction in Missouri.
Worse, your transplanted Kansas contract
won’t have notices required for construction in Missouri. For example, if any part
of the work will be covered by insurance, the contract has to include disclosures
required by Missouri Statutes § 407.725. Lien rights may be forfeit if the owner
doesn’t get the notice required by Missouri Statutes § 429.012. Omit the notice
required by Missouri’s Right to Repair Act and you lose the right to inspect any
claimed defect and make repairs.
Other Examples
I’ve been talking about MO and KS. But
you’ll have nearly the same problem in any pair of states. Take this to the bank:
Contracts have to comply with law at the construction
site. And construction contract law is different every state.
If you handle jobs in two or more states,
there’s an easy answer. Construction Contract Writer drafts perfectly legal agreements
for any state you select. The single-state version is $119. Or get CCW for all 50 states for $299. The trial version of either is free.
Once the 50-states version of CCW is
installed on your computer, try this: Change the construction site address in any contract to a
different state. The agreement morphs into a contract perfectly legal in the state
just selected.
So, I guess the answer to the first question
above is a qualified “Yes.” With Construction Contract Writer, you can make essentially
the same construction contract work in every state.
