September 3, 2010

*********

Question:

***********

Hello Ken,

    We could use some discussion of a possible alternate way to create an enforceable contract, i.e., "impressing" a contract.

    There is no shortage of weasels who want to fly for free; or lazy people who never seem to get around to returning signed contract sets.  There are people who dodge the issue by repeatedly postponing the appointment.  Perhaps they're just busy or on vacation or perhaps they want to get comfortable with us first.  Or they sign in a couple of places and skip over others.  We usually nail them down by and by, but if we're getting bad vibes we pull the plug or we just refuse to do the job in the first place until they sign.  (I'm referring mostly to commercial accounts in that regard because PA law now requires a written contract before a residential job can even start.  That, by the way, is the ONLY good thing that has come out of PA's Home Improvement Consumer Protection Act.  Don't anyone pass up an opportunity to push for repeal of that miserable law.)

    There are assorted construction scenarios.  There's the General Contractor, who will demand that we sign their purchase order [a topic for another discussion] but who will rarely sign our installation contracts.  (We would absolutely require it if the job is being built speculatively.)  However, we primarily want the end-user to sign everything.  Unfortunately, the authorized person is usually in another state and we have no choice but to mail or email the forms out and expedite until they finally come back.

    Then there are construction managers who take our paperwork set for forwarding and then according to standard protocol, promptly lose the whole pack.  (Hint - DO NOT let anyone put the papers into a plain manila envelope.  It's the junk-mail kiss of death.  Staple the pack together and keep the front page out in the open where it will look much more important and active.  Or, at worst, bind it all into a well-marked file folder with a shiny metal clip.  Again, NO ENVELOPE!)

    Then there are (cough) lazy or too-busy sales people who just want the deposit check and who defer the hard paperwork until later.

    Meanwhile, time is usually of the essence in getting things done on a construction job, and we end up with an exposure.

    My service reports and my proposal forms include a big announcement right above where the customer signs, the essence of which is that ALL service and installation are provided ONLY under the terms of our standard written contracts unless otherwise agreed IN WRITING.  I'm sure you will tell us this is meaningless unless the client actually signs a page containing that wording at least once.  (We endeavor to get them to sign it EVERY time we see them.)  If it's a truly enforceable device, it would cover our butts until we do get the actual contracts signed.

    Could you please comment on the viability of this "interim" precautionary measure that has the potential to become the permanent situation, either by a deliberate business decision or more likely, through an oversight?  What are the essential elements of impressing a contract?  For example, is it essential for the client to actually have a sample copy of our contracts in hand (with or without proof of delivery?) before the contract can be deemed impressed?

    On other forms like renewal letters, (whether accompanied by new contracts or not) I always use the aforementioned device and also refer back to the original underlying contracts, saying, if you have lost your original contract, upon request we'll send you new copies for a small fee; and if they've been misplaced or they're missing (or even if they never existed) or found to be defective (e.g., a missing signature in a pack that takes a half-dozen signatures) then we'll rewrite them at no charge.  There have been cases where we found it to be more practical to just make up a new set than dig the old one out of a banker's box in the attic.

    A dealer's contract collection is his pot of gold.  All contracts need to be accessible on short notice.  We used to make a copy of the set for the off-premises safe, putting the originals in the customers' job files.  In recent years improved hardware and software have enabled us to scan these important documents so they're more readily retrieved, but that still requires filing skill and discipline in the office.  We haven't yet abandoned the practice of making that copy for the safe.

    The essence is that we never miss an opportunity to emphasize and confirm the existence of our standard contracts; and that they govern everything we do, whether you actually signed them or not.

    One last thought:  We have many opportunities to pick up extra income via incidental services that aren't specifically described in our repair agreement.  We emphasize that our contracts, particularly the limitations of liability, apply to everything we do, including incidental services that are not explicitly described in the contract (for example, fixing a doorbell or broken phone wire because we happen to be there and can do it).

Best regards,

Lou Arellano, III

***********

Answer:

********

    An enforceable contract requires a "meeting of the minds" regarding all essential terms of the bargain.  Not all contracts need be in writing, and not all contracts need be signed by the party to be charged [the party against whom enforcement is sought].  In fact, there was a time when no contracts were in writing; the "in writing" requirement was developed by statutes.  Now we have plenty of them, statutes that is, especially when it comes to "consumers", generally defined as residential customers contracting for home use of goods or services.

    Other than a fully executed contract, there may be "extrinsic" evidence to support the enforcement of a contract.  Extrinsic means something other than the written document itself, for example, there is sufficient proof that a written contract was prepared, perhaps correspondence discussing it and approving it, a deposit or other payments, yet the contract itself never gets signed.  It will more than likely be possible to enforce the prior hypothetical contract; however, more difficult with "consumers" because some statute has probably been violated in not getting the contract signed.

    Physical paper contracts are heading towards extinction, sort of like carbon paper.  Electronic signatures are permitted; scanned or faxed copies of contracts are enforceable. 

    But, right now there is nothing better than a signed contract, properly executed and preserved.  You'd be foolish to do any alarm or security services without a properly drafted contract signed before any service is provided.  As inconvenient as that may be sometimes, it should be a strict rule to be followed by every alarm business.