There are several statutory protections for consumers against unfair or fraudulent business, but as the old adage goes, an ounce of prevention is better than a pound of cure. Rather than needing to rely on those statutory protections, with a little bit of effort and a discerning eye you could save yourself a lot of hassle, particularly when it comes to entering a construction contract.

Consider the following clauses:

  • Method of Payment: Payment of the Contractor’s compensation, together with any eligible HST will be made by cheque payable to the Contractor, or as the Contractor may in writing direct. Payment of expenses may be made directly from the Client’s credit card, such details to be provided under Schedule B.
  • Late Payment: Any amounts payable by the Client hereunder which remain unpaid [INSERT NUMBER] days after an invoice is delivered to the Client shall be subject to a late charge equal to [INSERT AMOUNT] percent ([INSERT AMOUNT]%) per month from the due date until such amount is paid. If the Client fails to pay any outstanding invoices after [INSERT NUMBER] days, the invoiced amount may be charged to the Client’s credit card in the sole discretion of the Contractor.

To put things in context, construction projects can get expensive, and the scope can quickly expand to something far beyond what was originally contemplated. Given that, a glaring red flag should be jumping out at you from the clauses above.

Placing your credit card information in the contractor’s hands, and giving them the authority to automatically charge it is handing over a great deal of power and opening yourself up to a great deal of risk if the contractor abuses that authority!

Usually, the contractor is the one handing you the contract to sign, so don’t just skim it and assume they’ve got your best interests at heart or that everything in there is just standard practice. Keep an eye out for risky provisions like these, and push back on whatever you’re uncomfortable with. Don’t go at it alone though! Always be sure to check with a legal professional who is experienced with construction contracts.

Browse Clausehound’s learning library for construction agreements, and click through the tags on each clause to learn more!

 

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