When Do I Need a Contract?

Every construction project needs a contract. Thirty-one states and the District of Columbia require a written contract on all residential jobs: AR, AZ, CA, CT, DC, DE, HI, IL, IN, KY, LA, MA, MD, ME, MI, MS, ND, NH, NJ, NV, NY, OH, OR, PA, RI, TN, TX, VA, VT, WI, WV and WY. 

Twelve states don’t require a written agreement but do require that the contractor deliver a set of written notices or disclosures before work starts: AK, AL, FL, GA, ID, KS, MN, MO, MT, OK, SD and WA.

And the other seven states? You still have to provide the written Federal 3-day right to cancel on nearly any residential job.

What Happens Without a Contract?

I’ll let a New Jersey case decided last month frame my answer.

Sharon Park planned to move from Illinois to New Jersey and bought a condo in Cresskill, NJ. The unit needed some work. Sharon called a local design and remodeling company, Kuken LLC. Kuken recommended new flooring, new kitchen cabinets, remodel of the master bathroom and painting throughout. That was July, 2017. 

On August 10, Sharon visited the Kuken showroom to review sample cabinets, flooring, and paints. She liked what she saw. Two weeks later, Sharon returned to the showroom and made her selections. A week after that, Sharon and Kuken met again to review the estimate -- $34,380. Sharon gave her OK to proceed and wrote two checks, the first for $9,523 with a memo “cabinets”. The second check was for $9,000 and included a note, “deposit”. She also gave Kuken keys to the condo so work could proceed while she was gone. Completion was to be by the end of October.

All this was perfectly routine -- except for one minor detail. There was no signed contract. What should have been a short, easy project became an expensive odyssey. And it's still not finished. I'll explain.

New Jersey requires a written contract for any home improvement project over $500. The contract has to include specific disclosures. Penalty for failure to comply: Refund of all money collected or treble damages plus legal fees. And it’s always the contractor that pays. The owner has no obligation to sign a valid contract.

Work Starts

Kuken started by removing several cabinet doors as samples. Days later, Sharon sent a message asking for a change:  "If the bathroom remodel is going to take several months then I would rather just replace the vanity in that bathroom . . . and just get kitchen cabinets, floors, and paint done." Keuken agreed to send a new estimate covering just what Sharon wanted.

Four days later, Sharon and Kuken met again at the showroom. Kuken assured Sharon that they would send a new estimate. The job would be finished on time.

As of September 25, there still wasn’t any written contract. But Sharon and Kuken worked together on an application to her home owners’ association. Sharon needed permission to begin work. Kuken supplied the liability certificate required by the HOA. The following day, Sharon advised Kuken that the application had been approved and asked once again for a final estimate. Kuken sent the “final”’ estimate three days later – but still no contract.

In a conference call two days later, Sharon complained that the “final” estimate didn’t mention paint or primer. Kuken offered to correct the estimate and promised that work would be completed by the end of October.

Two days later, Kuken called to say they couldn’t meet the October completion date. Work wouldn’t be done until the end of November. Sharon threatened to cancel the project. Kuken explained that Sharon couldn’t cancel now. The doors were already on order and would arrive by October 6, 2017. Installation was scheduled for October 11. Sharon accepted the new schedule but cancelled the flooring and painting part of the job – reducing her cost by $7,194.70. And she wanted a new estimate.

Kuken sent the new estimate on October 3, 2017 – but still no contract. According to Sharon, this new estimate still wasn’t right. She wanted another estimate for just the cabinet doors.

Kuken responded with two options: The first was to install the cabinet doors and issue a refund for $7,310.83. The second option was to deliver the cabinet doors and hardware and refund $8,810.63. Sharon agreed to the first option if work would be done by October 13, 2017. She refused to sign anything that did "not have [that] level of detail."

On October 5, Kuken sent a new estimate, including a note that delay was possible, depending on the schedule of the manufacturer. Sharon crossed out that language, added her signature and returned the amended estimate. Kuken didn’t like that, insisting on a signed copy of the estimate without any deletions. Sharon never signed the revised estimate.

Here Come the Lawyers

On October 12, Sharon’s attorney sent a letter to Kuken demanding refund of the full $18,523. Now Kuken needed a lawyer. Kuken’s legal counsel recommended limiting contact with Sharon and advised against returning anything to her.

As I’ve said before in this space. When the job goes bad, you better have a good contract. Kuken had no contract at all.

What came next was three years of litigation in New Jersey courts. The trial court awarded Sharon $72,569, including treble damages, attorney's fees and costs. Kuken appealed. The appellate court affirmed that judgment in part, vacated it in part and remanded the case back to the trial court for further proceedings. That’s where the case of Park v Kuken LLP is today, more than four years after work started.

Be aware: Any job without a contract can morph into a slow-motion train wreck. Don’t let your next project run off the rails. Lock in the price and terms before lifting that first tool. Construction Contract Writer does that -- and meets legal standards of all 50 states. The trial version is free.