Running your own construction business is hard work, but (fingers-crossed) it also very rewarding and profitable.
Getting sued is never fun. Legal proceedings are expensive, time-consuming and soul destroying. Legal disputes can also demolish the profit margin on a project, or dry-up the business’s cash flow, very quickly.
We get asked many times, “How do I avoid being sued?”
There is no bullet-proof solution to protect you from being sued. Sometimes you’ll have clients that want to fight you on every issue, who do not want to pay and who will not let things go.
There are things you can do before entering into a contract to assess whether a potential client is likely to be argumentative, petty or unreasonable.
But that’s a topic for another blog post.
Here are some things you can do to reduce the risk of finding yourself tied-up in expensive legal proceedings.
All law suits (every single one) can be traced back to a moment of misunderstanding, a breakdown in communication or someone’s expectations not being met.
We know you are not taught how to communicate effectively when you are learning how to swing a hammer or to dig a trench. But if you can develop skills in communicating clearly and avoid overreacting, then you are well equipped to manage those clients who may push your buttons.
At times, communicating face-to-face with people can be really hard particularly if a client is trying to raise multiple issues at the one time, or avoid talking about other things.
Sometimes the best way to approach a situation is to accept that talking about things doesn’t work, and it’s better to communicate through email or text messages.
If you are communicating with a client through emails or text messages, make sure you always keep a copy or a screenshot. You never know when you may need them to prove your case in court.
And always assume that your emails and text messages are being screen shotted and stored. Always keep communications professional.
Always use clear, properly drafted, written contracts
We know, this sounds like another no-brainer.
But most of the work our Litigation Team do, involves agreements made on handshakes.
Legal proceedings over agreements not written down make lawyers lots of money. There, we said it.
It’s also an offence under the QBCC’s legislation if some contracts are not in writing.
Written contracts provide peace of mind. At a basic level, contracts set out what each party is required to do, by when and what happens if one party does not live up to their end of the bargain. Writing things down avoids one of the common causes of disputes; someone’s expectations not being met.
It would be nice to still live in a time where people honoured handshake deals, but sadly those times are behind us.
Get it in writing!
If a client asks you to change anything about a contract make sure you confirm the discussions and any agreed changes, in writing.
If a client asks you to build something a particular way, or wants a product used that you know may not work then you need to stop, take some time, think about the risks and take steps to protect yourself.
Always get requests or instructions from clients in writing. Any advice you give a client about using a particular product or the way they are asking something to be built, always confirm in writing.
Even if it’s just an email which says, “Hi [client], just confirming our discussions today about [describe the issue]. Today you said you would like us to [describe what they want you to do] instead of [outline what’s stated in the contract, plans or specifications]. My advice is [confirm your advice]. But if you want us to go ahead with [again describe what they want you to do], it will cost [insert price] and will take [insert how long] in extra time to complete. Please reply to this email if you want to go ahead. I’ll take your reply as meaning you have understood my advice and you accept the estimated costs and time frames. I cannot go ahead until I have your acceptance in writing. Looking forward to hearing from you.”
An email is better than nothing.
Taking a few minutes to send an email could save you thousands of dollars down the track.
If you operate a construction business in the residential sector then you risk being prosecuted by the QBCC if variations to residential building contracts are not put in writing before the work is done.
Trust your gut
If it doesn’t feel right, then don’t do it.
If a client asks you to deviate from your normal processes or policies, and you don’t feel comfortable about it, then don’t do it.
Have a lawyer review any contracts or documents that you don’t understand before you sign on the dotted line.
Don’t cut corners
We know you always try and do the right thing, but sometimes the stress of looming project deadlines or demanding clients make it easier to justify taking a few shortcuts.
Our advice is don’t do it. Don’t cut corners. It may save you a few dollars and a bit of time, but in the long run it will cost you thousands and thousands of dollars.
Clients are becoming very savvy at spotting shortcuts. They can tell when cheaper materials are used or critical steps are missed. Google and YouTube give everyone the ability to become master builders or renovation warriors. They watch the reality TV shows that show entire unit blocks being stripped, renovated and sold in under 12 weeks.
If the shortcuts don’t immediately appear, they will become obvious eventually.
Remember, keep a cool head and look at the big picture, including your other projects and your business’s reputation. Communicate effectively. Use written contracts. Get everything in writing. Trust your gut. Don’t cut corners. Many of these tips make good business sense. If using these tips don’t avoid legal proceedings, they will at least strengthen your case.
Members of the Queensland Master Builders Association of Queensland receive reduced rates for our legal services. Do you need our help? Connect with us here.