Effective Contracts Spell Everything Out in Writing

Over the years, the sales contract has evolved from a one-page contract to a multi-page agreement. The truth is, with all of the choices available to clients today, it’s almost impossible to provide the necessary information on a one-page contract. In fact, if you offer all of the products that could go into a kitchen or bath project, you would need a small booklet to get all of the information down in writing.

I’ve found that giving as much information as possible concerning the agreement for a project has saved my company many headaches and a great deal of money over the years. At my firm, we use a multi-page form contract that provides all of the information concerning the project. We also use this agreement to state the things we won’t be doing, as well as the things that aren’t our responsibility.

Materials and Service
Since my company does both kitchens and baths, we have two different contracts, since the one for baths will be different than the one for kitchens.

The first page of the contract features the date, and covers the client’s information, including the customer name or names (if it’s a husband and wife, both names are required by law); the address of the client; the job address, if it’s different from the client’s address; the job-site phone number, and work and cell phone numbers.

The contract starts off with the statement, “We propose to furnish all material and perform all labor necessary to complete the following kitchen remodel.” If this is a material-only contract, we will eliminate “and perform all labor necessary.”

The next part of the contract covers the cabinets. There’s space to write down the brand of cabinets; the wall and base door style; the drawer head; the edge profile; the color of the cabinet; the wood specie, and the color of glaze, if applicable. Here, we also highlight the type of drawer box; the type of slides (full-extension or standard slide), and the overlay style of the doors and drawers (full overlay, marginal or standard). The color of the interior is also noted, as is the type of hinge that has been selected. This section also notes whether or not hardware is being sold. If so, there’s a place for the door and drawer hardware, brand, color and model number. It then says “all as per plan,” as this contract is based on the approved floor plan.

While this section may not apply for a stock-type cabinet that only comes in two colors, for the most part, there is a lot from which to choose, and we need to be sure there’s no misunderstanding as to what the customer is going to be getting.

The next item on our agreement is the countertop. Again, when there are options to pick, spell it out. We allow space to indicate the brand of the countertop material, the color, whether it has a backsplash and, if so, how tall. We also note the thickness of the countertop and the edge profile. If there are to be cut-outs, that’s noted, as well. The type of sink and its style – top-mount or undermount – are also indicated. If the top is to have holes for the faucet, that should also be designated. There’s even a space to order a window sill if it’s to match the countertop.

The next item we have is the sink bowl and the faucet. Again, we indicate the brand of each, the finish, the style and whether or not the faucet is a pull-out spray model. There’s also space for noting the sink strainer and finish, as well as a hot-water or soap dispenser and the dispenser location, model number and finish.

The next page of the contract begins with the kitchen appliances. Listed here are the dishwasher, garbage disposal, range, cooktop, oven, microwave, range hood, refrigerator, ice maker, wine cooler, freezer, and even a washer and dryer, if applicable. The key here is to again note the model number, the brand, the color, if the appliance is gas or electric, when applicable, and the size. For the hood, we note if it needs to be vented or not. We also note who’ll supply the appliance, and whether or not someone else will do the install.

The contract then lists items such as ceramic tile for the walls and lights – where they will go and how many are included in the job – as well as the color, brand and size, if applicable. We then list any miscellaneous items such as bar stools, chairs, pot racks – anything that might be sold that’s not covered in the sections previously listed.

If this is an installed project, we follow with information about the removals, who’s going to do it, and exactly what’s going to be removed. If there’s a soffit, we note it and explain what is to be done. We then list all parts of an installation with which we may be involved, including windows, doors, ceiling and walls. The contract also notes who’s going to take care of painting and wallpaper.

The flooring is also noted, including what material is going to be used and what exactly is going to be done. If ceramic tile is used, the contract notes the size of the tile, any special patterns, the color of the grout and the grout line width.

Whether the baseboard is to be new or reused and, if new, what material is to be used is also noted. And, we mark the threshold.

The contract also has a place for the electrical work, and we state that this contract is based on the assumption that the existing electrical system is adequate. Should an upgrade to the electrical system be necessary, a separate quote and contract will be provided. The color of the switch and outlet covers are also noted.

Under the plumbing section of the contract, we state what is to be installed or moved. The same statement concerning adequate service is used for the plumbing as for the electrical.

Lastly, the contract notes whether or not we’ll be taking out permits on the work.

Terms and Conditions
The next few pages of the contract then covers the terms and conditions.

Our contract states that the NKBA standard form for warranty shall apply to the service and equipment furnished. It states that the warranty shall become effective when signed by us, delivered to the client and paid in full.

We also talk about the risk of loss in so far as damage and who’s responsible after the products have been delivered. We further note what products are special order. And we say that this agreement is not subject to cancellation unless all material is paid for by the client in full and any work already done is paid for by the client.

We note that no installation, plumbing, electrical, flooring, decorating or other construction work is to be provided unless specifically stated in the agreement.

We note that if we provide appliances or fixtures, they’ll be serviced and warranted by the factory-approved service company. Dissatisfaction with any appliance purchased from us won’t be a reason or cause for delay in payment.

We note that the client will pay an interest charge of 12% per annum due to payment delays. Plus, if a collection agency or attorney is required, the client agrees to reimburse us for that expense.

Final Touches
One of the most important areas of the contract is the notation of the start and completion dates of the project. We always tack on an extra four to eight weeks that takes us past the time we think a project will take.

The reason for this is, if something happens, we have the time to get it corrected and still be on time with the project. Most clients will ask about the length of time, but after we explain this to them, they understand and are fine with it.

Because it can be difficult to collect the final balance from some clients, we have a statement that says, “Upon the final payment, any and all service, re-ordering or replacement of parts for your project will be initiated by the designer or management. No service or warranty work will be honored until the original agreement has been paid in full.”

It is also important to note that all contracts must have a notice to the client concerning mechanics’ liens. For this portion you would need to check your local state laws.

After this, we record our deposit schedule: 50% with the deposit, 40% upon the start of the project, the credit for the design retainer, if used, and the final balance due upon usable condition. Notice it does not say completion.

We then have a statement explaining usable condition: When the project is complete as per the contract, and the kitchen or bath is usable to its full extent. This eliminates people holding the final check until we re-order a bad piece of molding or a new door, etc.

Anything that requires special attention should be put after the deposit schedule, but before the signature. When it comes to the bath agreement, the contract omits the appliance section and, instead, features bath items, complete with space for model numbers, sizes and colors.

Having this much detail in your contracts will save you a lot of money over the long run. Not only that, but it will further ensure satisfied customers. Because, as we should all know, the better the communication we have with clients, the better the job is – and the more profit you keep in your pocket!