Many contractor documents contain language indicating that the job being presented to the consumer —and its pricing — is just an “estimate” or a “proposal.” These agreements usually go on to state that if the consumer signs the agreement, it is up to the contractor to “accept” the proposal, usually within 30 days, at which time the parties will be in a binding contract.
Many contractors say this type of language protects against an underpriced or mismeasured job or against unforeseen problems with the job that may cost them more time and money. All valid concerns, but there are three typical problems with this type of “estimate” language:
The better solution is to have a clause in the agreement with the consumer indicating that, in the event of “unforeseen events” (which should be defined to include incorrect pricing or the discovery of structural defects), the contractor will have 30 days to refund the consumer's deposit and cancel the contract.
This allows the parties to enter into an actual binding contract at time of sale, and it still gives the contractor a reasonable opportunity to back out of the agreement. —D.S. Berenson is the Wash-ington, D.C., managing partner of Johanson Berenson LLP (www.homeimprovementlaw.com), a national law firm specializing in the representation of contractors and the home improvement industry. He may be reached at firstname.lastname@example.org.
This article is for informational purposes only and should not be construed as legal advice.