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On Contracts

200506SR0

200506SR0

It’d be great if we all lived in a world where a handshake was sufficient to seal a deal and no legal documents were needed. Unfortunately, however, we live in a society in which contracts are a necessity for most of us in business.

When I first started out, I took on jobs without signed contracts, and for the first few years I didn’t run into any problems. As I moved into higher-dollar projects, however, I developed a quick appreciation for the value of a contract when a client refused to pay for my services as we’d verbally agreed he would. Although I realize there are people out there who run strong, successful businesses without a need for contracts and rarely run into problems, for most of us I believe it is a critical component of every job.

The purpose of any contract is to define the relationship between the provider of a service and the client. It should delineate the service provider’s obligation to the client and define expectations, inclusions, exclusions and whatever else a particular project might require. In other words, it should eliminate any need to guess about how the business relationship will unfold.

GETTING SPECIFIC

In my own practice as a landscape designer, I only contract for design, installation supervision and project management, meaning I never collect money for anyone but myself as I am not a licensed landscape architect or contractor. Managing my jobs in this way eliminates a lot of bookkeeping and helps me sidestep certain legal hassles that would be involved if the money all ran through me.

My work in a design-only capacity is fairly straightforward, but as we’ll see below, there’s much to be encompassed in a design contract. As for installation supervision or project management, much more is to be done, including evaluation of other contractors’ bids and of the contracts they ultimately present to my clients.

Even when a contractor is reliable and familiar, I think it’s important to understand the full scope of the work for which each contractor expects to be responsible and make sure my clients completely understand their responsibilities with respect to each contractor. By looking out for their interests, I effectively make myself much more valuable to my clients.

For many reasons, every contract I create with a client is different from the last. Just as each job is different, so will be the scope of the work, client expectations and my own – and I know that everything should be as clearly defined as possible.

As I have pursued my career, I’ve also watched my contracts evolve based on what I learn from each completed project. I once thought it adequate simply to define the price of a design contract and state that it included all design meetings, research, hardscape selections, blueprints or plant lists, nursery visits and any other items needed to complete the design to the client’s satisfaction (a phrase that can come back to haunt you, so use it carefully).

As I’ve gained experience and wisdom, however, I recognize that it’s important to be as specific as possible under all conceivable circumstances, as you can never predict how a job is going to proceed and what issues might arise. The more specific I am up front, the less the chance there will be for misunderstandings later on.

With that in mind, here are some key issues I like to define in the various contracts I issue to clients.

[ ] Design contracts: As suggested above, design contracts can be reasonably straightforward, but there are nonetheless many areas and functions that need careful definition if the lines of responsibility are to be clearly drawn. These include:

* Design fees. It’s not important to tell a client how you arrive at your design fees, and you can always explain things verbally if they have specific questions. What is important is the fact that clients tend to feel more comfortable with a set fee and accept the fact that they have a defined obligation to you during the design phase.

I typically don’t do design work at hourly rates. My contracts do, however, spell out the fact that once the design process is complete, any major redesigns or site consultations (especially if they aren’t contracting with me for supervision of the installation) are to be billed at a defined hourly rate with stated minimums. I also clearly delineate what is included in the design fee and indicate any exclusions as well.

* Ongoing obligations. To prevent any misunderstandings once the design work is complete, I usually explain to clients in writing that I have been contracted strictly for design work and that if we elect to go beyond the design process and continue to work together, a separate agreement will have to be developed. To simplify this stage of the process, I briefly outline my fees for supervision of the installation to give the client a clear picture of what my additional involvement might cost.

I also make it perfectly clear that, once the design process is complete, they are under no further obligation to me and I am under no further obligation to them. Thus, if we have a difference of opinion through the design stage that can’t be comfortably settled, I am under no obligation to stay involved; for their part, they get freedom of choice when it comes to the installation process.

In addition, if they choose to install the job themselves or use someone else, such a clause makes it clear that I am under no further obligation with respect to the design. In other words, I can’t be held responsible for the way things turn out if they install things themselves. Contract clauses of this nature can become mazes of legalese, but there’s great value in defining a clear parting of the ways.

* Payment schedule. Each payment stage is clearly defined with a given dollar value. I know that an exact schedule is often difficult to chart – many stages overlap – but I try to be both as specific as possible and as fair as possible in sending invoices to clients. In fact, I frequently err on the side of caution and wait until I am past a particular milestone before requesting payment.

* Signature and date. This is the touchstone of legality: If you have a client’s signature and the date, you have a strong bit of protection in the event of a dispute.

* Plan details. Through the years, I have discovered that it’s often impossible to note every single plant on a plan and define exactly where it should go – a particular problem with complex plans, which can become so dense that they become very hard to read. As a result, I now include a clause in most of my contracts stating that all plants in five-gallon containers or larger will be specifically placed, but that anything smaller will be located based on my discretion as it pertains to the readability of the plan.

I’ve done so because I had a client who specified so many different varieties of plants that the symbols on the plan became confusing and hard to distinguish. There was no way everything would fit, but the client expected every plant (including quarts) to be specifically located because they wanted to be able to install the job themselves working from my plan. The mistake I made in the beginning was to allow them to think I could draw everything into a readable plan. I have amended my contracts accordingly.

* Expectations. This is something new in my contracts, and I believe now that it’s extremely important to set expectations up front – both for me and my clients. One specific example: I expect my clients to understand that they need to provide appropriate maintenance for the design once it’s installed. I am a designer, not a gardener, and I can create a beautiful design but I don’t want clients coming after me if poor maintenance makes things look bad.

* Project specifics. It’s important to recognize that contracts, while many of them have much in common, need to be tailored to the specifics of the job and the client. My practice is to cover as many bases as I can up front to avoid problems later. When in doubt, I proceed with caution. This won’t necessarily prevent litigation if a problem arises, but it may sway things in your favor if you’ve put your contract together thoroughly and well.

[ ] Supervision and Installation Contracts: Mine is a one-person operation, so I always work with contractors on jobs and have my clients contract directly with them for their services. My role in this arrangement is to be on site and govern every stage of the installation, from drawing lawn lines for irrigation and consulting with the contractor on various issues that arise on site to placing plants, working with the nursery and selecting plants or alternates.

In other words, my job is to support the client and the contractor to make sure the installation goes smoothly and to the client’s satisfaction. For this service, I might charge either a percentage of the contractor’s price on the installation or an hourly fee, depending upon the job. Whichever payment method is used, I clearly define how the payments will be invoiced and at what milestones or percentages of completion invoices will be generated.

To make things clearer – and to make sure the client has read and understood how payments will unfold – I include a simple example. Let’s say I’ve indicated that I will be charging 15 percent of the contractor’s fee: I state clearly that this includes the total of the contractor’s fees to the client and add: “If the total contractor’s fee is $10,000, the SRLD fee will be $1,500.”

[ ] Project Management Contracts: Many high end clients don’t have the time to supervise and coordinate the many trades that might become involved in a project, so I provide a service through which I make sure that the job progresses as smoothly as possible and perform as the person calling the various contractors required to complete the job.

On one job I’m working on now, for example, this service involves the coordination of a pool contractor, a general contractor, a landscape contractor, a carpenter, a lighting designer, an artist, an arborist, a fence contractor and various other trades. The client pays me a fee for overseeing everything and acting as his representative to everyone else involved in the project.

This is high-level involvement and implies considerable liability on my part, so I had an attorney draw up this particular contract based on what I defined as the scope of my role. Even in cases where my involvement isn’t so comprehensive and I develop contracts based on those I’ve written in the past, I firmly believe it’s never a bad idea to have a lawyer review a contract to point out places where you might need to do a better job of protecting yourself.

WHY CONTRACTS?

Ultimately, the reason we have the contracts is so that if one party – either the client or the contractor – has a dispute with how the job has gone forward, he or she has recourse based on a legal document that defines how the job should have proceeded.

As most of us know, no contract is ironclad and everything you and your clients see in writing is subject to interpretation – and it’s surprising how different those interpretations can be if a business relationship doesn’t work out. Ideally, however, a contract will both define how the work should be done and state upfront what everyone’s expectations should be. This, we can all hope, will minimize problems in the short run as well as the long run.

Stephanie Rose wrote her Natural Companions column for WaterShapes for eight years and also served as editor of LandShapes magazine. She may be reached at [email protected]

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