The majority of contract attorneys we have spoken to, say contingency contracts are virtually unenforceable.
Basically a contract is nothing more than a meeting of the minds – laid out in writing. “I am giving something of value in exchange for you giving something of value.” For example, I’ll pay you $10,000 and I get a new roof. The more specific the contract is, the more enforceable it is obviously. Essentially, the contingency construction contract is stating that ‘we will be doing some amount of work…. to be determined in the future…. for some amount of money…. to be determined in the future. Can a contract be more vague? That’s why contingency construction contracts are essentially not worth the paper that they’re printed on.
A colossal vulnerability that 95% of insurance restoration contractors have and are not aware of is, many of their contracts are null and void the day the client signs them. Here’s why, the majority of states have some public adjuster licensing laws in place. To negotiate with anyone regarding an insurance claims violates these laws. It’s referred to as public adjusting without a license or sometimes UPPA – the unauthorized practice of public adjusting.
This is critical. If your contract has ANY language in it like this at all, then it could very well cost you your business – we’re talking bankruptcy. And according to Wikipedia, a full 44 states have some form of statutory law that makes public adjusting without a license a crime. Is your business really at risk without these docs? THE SHORT ANSWER IS… YES!!! Let me share a quick story of triumph to tragedy with you about a major contracting company who were recently on top of the roofing contractor world with nothing but visions of continued success for their business, when they experienced a near catastrophic melt down practically overnight because they weren’t prepared with the necessary docs to cover them when things went wrong…
A little background, this is critical for you to understand – a couple years back, one of the largest roofing companies in the US was sued by one of its clients – I’m talking this billion dollar company do 8,000 roofs a year! No one could have guessed the potential ramifications that this small lawsuit could have for contractors nationwide. It seems they had some seemingly innocuous language in their construction contract that stated that they would work with the insurance company to help with the consumer’s claim as well as other common, seemingly innocent wording. The lawyer for the consumer jumped on that and made the case that their contract was null and void because there was language in it for activity that was illegal in that state for a roofer to be performing – UPPA language.
The consumer prevailed in court and the judge not only ruled that the contractor’s contract was null and void, but also ruled that the contractor must return every penny that they collected for roofs and other work, done under this contract, to all property owners, in full, upon request of course – going back to 2005! What an impact on their business. The legal reason was, that since the contract was null and void the day it was signed, the consumer had never agreed to pay the contractor one red cent for the work they performed.