How Written Records Can Protect Your Company
Last decade’s recession dealt a blow to many industries – but more so than most, the construction and contracting industries are still feeling the effects today. In 2008, and the years that followed, contractors and specialized tradespersons were forced to offer deep discounts to maintain employment. In addition, homeowners were defaulting on the lines of credit which financed their home improvement projects, leaving contractors with little recourse to keep their once-thriving businesses afloat. While construction has somewhat rebounded for the head-strong contractors that were able to weather the recession, contractors must still remain cognizant in order to protect their businesses and income.
Recently, I represented a home improvement contractor in a case where the homeowner attempted to rescind the contract after all work was completed. While my client performed work as agreed to on the estimate, the homeowner continually requested “extras” while my client and his professionals were at the job site. My client happily obliged, and performed numerous extra work around the home, only billing the homeowner for a small fraction of the completed work. When the homeowner refused to pay for the job, the parties struck a deal and my client accepted a lesser amount in full satisfaction of the invoice.
Several weeks later, the homeowner again requested a small amount of work to be performed at the home. Due to the prior payment issues with the homeowner, my client requested prepayment. In response, the homeowner sued the contractor for the full amount of the settlement the parties had reached. We counter-sued for the difference between the settlement amount and the actual amount on the invoice and won in both our defense and counter-suit. Our argument consisted of the legal defense of accord and satisfaction – which, simply put, is that the parties to the contract reached a settlement, and through that settlement, satisfied all outstanding claims arising from the contract. Additionally, we were able to provide third-party testimony that the homeowner was in fact satisfied with my client’s contracting work.
The most important lesson arising out of this case was to always keep records. My client provided the homeowner with a written estimate, an invoice outlining all work completed, and kept a copy of the settlement check he was provided. These documents show that the client was informed of what work was performed and that he tendered the settlement check in response. This enabled us to argue the theory of accord and satisfaction to our client’s benefit – a task which certainly would have been more difficult had the estimates or invoices been oral instead of written.
If you are currently facing an issue involving a construction dispute, whether small-scale residential or large-scale commercial, please feel free to contact me in order to discuss your options.
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Attorney Christopher Gleeson focuses his legal practice in the following areas: civil ligation, construction disputes, collections, land use, and municipal law. He was previously a lobbyist for the Pennsylvania Builders Association, and worked for a contractor during the recession. Contact Chris at cgleeson@dplglaw.com
