I just had a customer cancel a job (first time) and I refunded all but $1,200.00 of the deposit. I documented all my time and also had to return some materials. I covered all my costs and they agreed in writing to my numbers. I have a detailed contract, but not one word is mentioned concerning the cancellation of a contract. I feel I was lucky in that the customers did not give me a hard time, but I don’t want to leave this open in my contract.
What should be covered in the contract concerning the costs/expenses incurred for putting a job together and how the customer is responsible for such costs if they cancel? Thanks to all who reply.
Regards, Woodrow
“One measurement is worth a thousand expert opinions”
Replies
"At time of signing, a non-refundable deposit in the amount of $_________is required. Without reciept of this deposit, this contract is null and void."
There is more involved than just your time to date when customer cancells a contract. Many subs and materials suppliers and helpers have lives that are affected by cancellatioins and plans changes.
For a good customer whoi doesn't typically jerk me around I am very forgiving, that is my option, but cancel a contract on me and it will take a week to regroup. There are times imaginable that my reputation could suffer.
All this has a value. The language above covers it simply. If they can't commit to me, why shopuld I commit to them?
Excellence is its own reward!
In New Jersey, it is required that you give the client three days, and only three days, in which to cancel a contract with all deposits needing to be refunded.
I sit on my butt for three days and wait before I do a thing. After that, you can put anything you like into your contract. Caviat Emptor? I always specify a minimum of 10% of the contract must be paid to walk away. How much time do you spend estimating a 6 or 7 figure project?
I tend to go on that gut feeling you get when you first meet the client. The last time I ignored that feeling, I lost a lot of cash on a simple project. But, take no chances, and put in in writing.
I'm usually still wrapping up or involved in other projects when a contract is signed and the customer knows up front that even though he is signed he is just going to be placed on the calendar with a tentative start date based on the complexity of his job, the backlog at the engineer's office, etc. Also have, usually, a 5% non-refundable deposit involved because I have already spent time (which IS money) on the project. That percentage is adjustable and negotiable, within reason (mine). So, even if the customer cancels, I get a pittance for my preliminary work and I make sure that I don't involve the engineer (or anyone else who would need up front bucks or a fee for whatever work was performed) until after the 3 days have passed. The deposit is also suffucient to cover the costs of pulling the permits to start the job and my first draw comes on the day the permit is posted. That first draw covers the engineers work, material and labor to get to the next draw point (hopefully with some left over for me, too).
I made a deal once with a builder, a verbal deal, to have him build me a custom home per plans and specs I provided. He took over 16 weeks to get back to me with a lump-sum price proposal. In the 5 or 6 weeks that followed my initial meeting with him and his getting plans from me, I firmed up all finishes and fully scheduled out all lighting, plumbingware, cabinetry, interior millwork, hardware, and miscellaneous stuff like towel bars and toilet paper holders. I took off all the framing lumber and gave him the details. Same for all the hardwood millwork inside. Even after I gave him all that, he still took about ten weeks to get back to me with a figure. I was doing all this by phone and mail . . . he had no fax capabilities . . . from four states away. When I made the trip east about 6 weeks in advance of expected job start, he reneged on his quote, saying we would have to work out some sort of cost-plus way to do it. I walked away, and in the next 48 hours decided to GC the job myself. I wrote the guy a check for $1,000 for the efforts he put forth, but he felt I had done him something outrageously wrong. Cashed the check, though. We haven't spoken since.
The Peoples Republic of Maryland is also, if they cancel within 3 days of signing they get everything back. The plus side if you are unlicensed in this state and execute a home improvement contract you get a $20,000 fine.
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Isn't that a national law? For three days they can get it all back? Thats usually as long as it takes for the check to clear anyway. Thats what I have in my contract. With the exception of if the job has already started which is on my workorder.which i use for small jobs. I install garage doors and openers often times I can get a door the next day. If i can fill in with a job the next day and they pay me. There is no 3 days. This doesn't happen to often. I too rely on my impressions which are almost always good. All of these jobs are under a thousand. If not: seperate contract. Not quite like building a home.
Where there's A wheel there's a way, got any wheels?
I think the law is that if a consumer enters into a contract at a location other than the vendors place of business, there is a three day cancellation period. So if you go to a store that sells miniblinds, and place an order for custom blinds, you're on the hook as soon as you walk out the door. But if a sales rep from the same store goes to your house to measure and you place the order at your kitchen table, thenm you have three days to cancel.
Do it right, or do it twice.