PRESIDENT’S LETTER Martin Howard We’ve invested time and money in estimating a project, reviewing all the specifications, drawings and contract documents, communicat- ed with our suppliers and ven- dors, priced out all the materials and labor, calculated the risks of the job and submitted our bid. Great news!! We have been award- ed the project. It is critical that we not relax and assume the hard part is over. If we do, we put our entire investment at greater risk. One of the biggest mistakes any of us can make is not negotiat- ing a fair contract for our services. Unfortunately, this happens more frequently than you might think. One of the first things we all need to understand and accept as fact is that almost all general contrac- tors write contracts that are slanted in their favor. In many cases, they are seriously slanted against the trade contractor and put us at a disadvantage before we ever start. It sounds elementary and it shouldn’t have to be said, but rule number one is, we should never sign a contract we haven’t read and understood. We should never think that because we have a relationship with the customer that they will take care of us and not enforce the contract. Another common belief is that trade contractors are never successful negotiating any of the conditions in their contracts. Well, that’s exactly what the general contractors want you to believe. When we read the contracts, the first thing we must determine is, “Am I willing to take the risks assigned to me and sign this contract? If not, then I must identify the objectionable claus- es and either strike them or draft acceptable language I can agree to.” At the end of the day, if we aren’t able to negotiate acceptable language, we must make the busi- ness decision to either sign what we have or graciously walk away. Some of the key clauses that need our attention are: Payment terms, including any clauses about “pay when paid” or “pay if paid” as a conditional prec- edent. Some states have laws regu- lating this language. This means that the contractor only has to pay you “if” he gets paid or at some time “after” he is paid. Set off provisions, which allow contractors to hold money on addi- Best Practices – Contract Negotiations 14 TileLetter | March 2018