Contract issues .....

[brantmacga]

I got a contract today for a job I bid awhile back, and I had some issues with some of the language included I wanted to ask y'all about.

1) the contract states we understand that we will not be paid if the GC isn't paid.

2) the GC wants unconditional lien waivers before releasing a check.

3) the GC wants the right to audit our books for the project; not just for change orders, but for the entire project.

4) the GC wants all payments held in a trust; this project is not bonded.

5) the GC wants us to provide 1 hr for every 50 hours on site for part of a composite clean-up crew. We are required to clean our work area as usual, but they want us to provide labor to be directed by their PM to clean the entire site.


I take issue with #1 as my labor, material, and subcontractors have to be paid regardless.

#2, we never provide lien waivers before a check; I know we still have rights to file a non-payment affidavit, but regardless, we just don't do it. We offer a copy of a conditional lien waiver that will be mailed once a check has cleared. All based on experience.

#3, just no.

#4, again, no.

#5, whatever. I've never worked with a GC that doesn't hire a clean-up crew.

There are also a couple of items outlining responsibility for things that are expressly excluded in my proposal. I asked for an addendum to the contract, and was told none would be given. The contract has been forwarded to our attorney for review, but I'm curious how standard some of these things are with other GC's.

At this point we're at a standstill over the lien waivers. I was told we could personally exchange lien waivers for a check, but that I would have to drive to their office 2/hrs away. I countered with the option of them coming to my office, or sending payment with the PM to exchange. They said no to both, and I'm saying no to a half day round trip to collect.


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[justin13me]

Walk away. That sounds terrible.. better to not work at all than work for free/ at a loss. Unless the margins are 50%+ how can you make money. Pay all labour and material before hardly any return.. Sounds like bs

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[Fulthrotl]

1) the contract states we understand that we will not be paid if the GC isn't paid.

2) the GC wants unconditional lien waivers before releasing a check.

4) the GC wants all payments held in a trust; this project is not bonded.


There are also a couple of items outlining responsibility for things that are expressly excluded in my proposal. I asked for an addendum to the contract, and was told none would be given. The contract has been forwarded to our attorney for review, but I'm curious how standard some of these things are with other GC's.

wtf, over?
do you have a bid bond riding on this?

if no, don't even bother to reply.
this makes the back of that truck look really good by comparison.

anyone who sent something like this out for a signature, is just
looking for someone to cheat.

 

[Cow]

They've said "no" to every counter offer you've suggested as a compromise.

It seems the only sensible thing for you to do at this point is tell them "no" to the project. If it's this ugly at the front end, how do you see this playing out in the middle of the project? It's only going to get worse....

Our shop wouldn't touch this with a ten foot pole.

 

[brantmacga]

I'm in agreement with all of you, but was genuinely curious if anyone else has seen this in a contract. I'm sure the attorney will have some things to say, and those items will be submitted to the GC to request a contract rewrite or addendum. They told me this contract was drafted by their attorney. I'm certain if I went to an attorney and said "write me the most one-sided contract possible", this would be the result.


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[brantmacga]

Contract issues .....

wtf, over?
do you have a bid bond riding on this?
.

No bond, which is why I was surprised to see that in there. We're absolutely not going to agree to that.


Does anyone ever ask for a copy of the GC's contract before even submitting a bid? I'm thinking I should start doing that ......

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[oldsparky52]

I agree with the others, don't respond, or just say no.

Edit: I guess I would wait for the attorney's comments. My gut says just walk away.

 

[Sierrasparky]

I have seen that ridiculousness in quite a few contracts over the past 10 years. What I usually do if I want the job is strike out the garbage language. If they agree then I do the work. If they don't I notify all my colleagues so they don't get stuck.

 

[gadfly56]

Ask the clown if his lawyer understands the term "unconscionable contract".

 

[petersonra]

I got a contract today for a job I bid awhile back, and I had some issues with some of the language included I wanted to ask y'all about.

1) the contract states we understand that we will not be paid if the GC isn't paid.

2) the GC wants unconditional lien waivers before releasing a check.

3) the GC wants the right to audit our books for the project; not just for change orders, but for the entire project.

4) the GC wants all payments held in a trust; this project is not bonded.

5) the GC wants us to provide 1 hr for every 50 hours on site for part of a composite clean-up crew. We are required to clean our work area as usual, but they want us to provide labor to be directed by their PM to clean the entire site.


I take issue with #1 as my labor, material, and subcontractors have to be paid regardless.

#2, we never provide lien waivers before a check; I know we still have rights to file a non-payment affidavit, but regardless, we just don't do it. We offer a copy of a conditional lien waiver that will be mailed once a check has cleared. All based on experience.

#3, just no.

#4, again, no.

#5, whatever. I've never worked with a GC that doesn't hire a clean-up crew.

There are also a couple of items outlining responsibility for things that are expressly excluded in my proposal. I asked for an addendum to the contract, and was told none would be given. The contract has been forwarded to our attorney for review, but I'm curious how standard some of these things are with other GC's.

At this point we're at a standstill over the lien waivers. I was told we could personally exchange lien waivers for a check, but that I would have to drive to their office 2/hrs away. I countered with the option of them coming to my office, or sending payment with the PM to exchange. They said no to both, and I'm saying no to a half day round trip to collect.


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I have seen variants of all of these over the years so they don't especially disturb me.

I think I would be inclined to ask that they be waived if you are unwilling to comply. If you can't get a waiver for something that you are unwilling to do just politely no bid the job and move on.

#1 - If you have not figured out that your chances of being paid are affected by whether the GC gets paid or not, you probably have not been in business long enough. I would make sure my progress payments covered most of the expense of the job as it went along so this might not be an issue, or much less of one than it seems at first glance.

#2 - used to be common for end users not to pay off the GC until they got lien waivers. Where I used to work we often provided lien waivers for the major chunks of equipment as we were paid for it, and that was generally considered adequate to the end user.

#3 may well be for making sure you are actually buying and paying for parts and such. It used to be very common to have to supply unpriced purchase orders for example, to show that parts had actually been ordered before we were allowed to submit for payment on long lead items. Have not seen that in a while, but it does not seem unreasonable to me. Maybe you could get them to define the scope of the audit so it is less offensive to you.

#4 - there are all kinds of schemes to avoid paying bonds since they can be pricey.

#5 - I don't have a major issue with #5 either. Just tell them in your contract how much cleanup labor is included and get the laborer's union on the horn to provide that much labor as directed by the PM. It's a little extra work for you, but if that is what they want, so be it.

What did your lawyer say about these things when he reviewed the contract for you?

 

[Chamuit]

Just at face value, I don't think I would sign or agree to anything that took all of my leverage away.

Don't be afraid to follow your gut.

 

[cowboyjwc]

You don't get paid if he doesn't get paid. You just know he's going to tell you he didn't get paid.

 

[growler]

#1 - If you have not figured out that your chances of being paid are affected by whether the GC gets paid or not, you probably have not been in business long enough.

That may be so but it's not wise to ever willingly give up a collection option ( to include hired goons).

The GC would not want that in the contract if it was not to his advantage.

 

[petersonra]

The GC would not want that in the contract if it was not to his advantage.

Do you have a point? The GC is entitled to ask for anything he wants, including things that benefit him.

Contracts are not a one sided thing and no one is forcing anyone to agree to terms they are unwilling to live with.

If you can't accept the terms, decline to bid if you cannot get a waiver. But I would be willing to bet plenty of subs will not find the requested terms unacceptable.

 

[growler]

But I would be willing to bet plenty of subs will not find the requested terms unacceptable.

Just because there is a sucker born every minute is no reason to join them.

 

[kwired]

What is total project bid price?

Is this going to be a significant source of income for say the entire year?

If it is a "small project" to you and you can afford to wait for problems to work themselves out, that makes a big difference in how you possibly may approach it vs. if this project is going to be a majority of your income for the year.

 

[petersonra]

Is this going to be a significant source of income for say the entire year?

If it is a "small project" to you and you can afford to wait for problems to work themselves out, that makes a big difference in how you possibly may approach it vs. if this project is going to be a majority of your income for the year.

That's a good point. If the OP is a relatively small operator compared to the scope of the contract, it could be more of a risk than he should take, regardless of the terms. Even if the OP were to get everything changed that he does not like, he could still end up getting stuck if the GC goes bust, or the end user does.

 

[gadfly56]

Do you have a point? The GC is entitled to ask for anything he wants, including things that benefit him.

Contracts are not a one sided thing and no one is forcing anyone to agree to terms they are unwilling to live with.

If you can't accept the terms, decline to bid if you cannot get a waiver. But I would be willing to bet plenty of subs will not find the requested terms unacceptable.

See my post at #9 and unconscionable contract.

#1 is a big issue, and some states forbid "pay if/when paid" terms.

 

[Besoeker]

I'm in agreement with all of you, but was genuinely curious if anyone else has seen this in a contract.

I've seen similar. I was in the meeting with our senior sales guy. One of our best assets. You wouldn't have wanted to play poker with him.
Similar unreasonable terms were being proposed. We walked out of the meeting. It was for a £1.2 million project.
We won it in the end and the value had increased to £1.4 million.

My take?
If you are not happy with the terms, the potential risk, walk away. You may or may not be respected for that. The customer may relax terms and conditions.
If not, let someone else take the risk. Maybe nobody with an ounce of common sense will accept and the customer will come back to you.

Just my two pence worth.

 

[petersonra]

See my post at #9 and unconscionable contract.

#1 is a big issue, and some states forbid "pay if/when paid" terms.

if that is the case in his state then it would not matter whether it was in the contract at all. it just could not be enforce.