Succeeding in Your Business

Cliff Ennico 

‘If you can’t convince them, confuse them’

“I run a small contracting business. I have been hired as a subcontractor on a large construction project — a 40-story downtown office building.

“I am told there are more than 70 different contractors who will be working on this project. My company will be responsible for only a small piece of it.{mprestriction ids="1,3"}

“The subcontract they want me to sign is ridiculous. Among other things:

“• They want me to give an unlimited indemnity for anything that goes wrong with my work. So even though I am being paid only $10,000, I could potentially be on the hook for millions of dollars.

“• The contract says they don’t have to pay me if my work is delayed for any reason, no matter how short the delay and even if the delay is not my fault (for example, if other contractors don’t complete their work on time or if a supplier delivers materials late to me).

“• They want to hold back 20 percent of my fees until they are completely satisfied with my work, which might be months after the project is finished.

“I’ve asked the general contractor to change some of this language, but he says he can’t spend the time negotiating 70 different contracts with 70 different contractors. Everybody, in his opinion, has to sign exactly the same contract.

“I’ve never worked with this contractor before. What can I do to avoid being nailed to the wall if things don’t go 100 percent perfectly with this job?”

It’s no secret that the construction business is a brutal one, especially for small contractors. The provisions you describe in the subcontract are truly unreasonable. Any attorney would insist on negotiating these so they are more in your favor.

Having said that, I can also understand a general contractor’s not wanting to spend hours of legal time negotiating contracts with 70 different subcontractors and having to keep track of them afterward. Remember that the general contractor is accountable to the owner of the project, the architect and other professionals, and even a small delay from a small contractor could cause him to be in default under his main contract, with who knows what consequences and penalties.

There are two things you can do:

First, check out the general contractor’s reputation. Contact some of the other “subs” on this project, especially those who have worked with the general contractor before, and ask how the general contractor performs in practice. Does he pay on time? Does he complain about nit-picky things? Is he a bully? Is he forgiving when there are delays that clearly are not your fault and you are doing your absolute best to resolve? If all the reviews are positive, you probably can take the risk of signing the subcontract “as is,” as it is likely to be invoked only if you are truly at fault.

If that’s not possible, or if the reviews from other subs are negative, there is one other approach (although it entails some risk).

You can send the general contractor your own form of contract — presigned — with contract language that protects you in case things don’t go as planned. Or you can send back an “addendum” with changes to the offending language along with the original contract. Sign both documents and be sure to include language saying that in the event of conflict or inconsistency between the contract documents, your contract prevails.

Now, the general contractor is almost certain not to sign your contract or addendum (if he notices it’s there). Even if he does, by making those documents part of the general contractor’s project file, you have created a situation in which you are working under two contracts that contain conflicting or inconsistent terms, such that it will be difficult or impossible to determine exactly what was agreed to in your contract.

Lawyers have a name for that. They call it a “battle of the forms.” Sometimes — surprisingly — it can work to your advantage.

In a perfect world, you should always sign contracts that make sense, are reasonable and crystal clear, and that protect you in the event there’s a falling out down the road. But sometimes in the real world, that’s not possible, and this sounds like one of those situations.

There’s a saying among trial lawyers: “If you can’t convince the jury, confuse the heck out of them, because that way at least you have a chance at a mistrial.” If the general contractor refuses to negotiate its contract, mix it up with other contracts, addenda and other documents so that the actual intent of the parties is open to interpretation.

It may not work in the end, but at least you will have a chance at getting your day in court if there’s a problem with this project, and the mere threat of a court dispute or lengthy arbitration may force the general contractor to settle the dispute more favorably to you.

Cliff Ennico (crennico@gmail.com) is a syndicated columnist, author and former host of the PBS television series “Money Hunt.”

COPYRIGHT 2022 CLIFFORD R. ENNICO
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