If you are a contractor doing business in NJ, you are probably already aware of the bevy of regulations to which you are subject, including registration under the Contractor’s Registration Act. N.J.S.A. 56:8-136, et seq. In addition, you probably know that all work exceeding $500 must be agreed to in a written contract. In fact, failure to have a written contract for work exceeding $500 severely complicates a contractor’s ability to collect payment for work completed, even if it was done perfectly. Compliance with these regulations is critical because failure to comply can subject the contractor to severe penalties beyond just an inability to collect payment for work done.
Did you know that even a mere technical violation of the regulations can subject you to treble (triple) damages and responsibility for the plaintiff’s attorney’s fees under the Consumer Fraud Act (“CFA”)? In fact, the homeowner does not even have to prove that they suffered an actual loss- a technical violation is sufficient! In BJM Insulation and Construction, Inc., 287 N.J. Super. 513 (App. Div. 1996), the appellate division held that incurring attorney’s fees alone are sufficient to prove an ascertainable loss under the CFA. Furthermore, under Cox v. Sears Roebuck and Co., 138 N.J. 2 (1994), the award of attorney’s fees and treble damages to a plaintiff who proves a violation of the CFA is mandatory. The judge does not have the discretion to lower the damages.
If this seems punitive, it’s because it was intended to be! NJ legislators have created an extensive regulatory framework to protect homeowners from unscrupulous contractors. So, how do you protect yourself and your business from accidental technical violations under the CFA?
A Contract That Complies with Regulations
The easiest way to shield yourself and your business from attacks for technical violations of contractor regulatory law is to comply! A well-crafted contract can maximize compliance with contractor regulations, foster good relations and trust with your clients, maximize your likelihood of collecting timely payment, and minimize the chances of litigation.
To comply with regulatory requirements, the contract must detail specific pieces of information. Some of the information that must be provided is:
· The name and legal address of the contractor and the person or agent who negotiated the contract for the contractor
· The contractor registration number
· A description of the work that will be completed
· The timeline in which the work will be completed and the date on which work will commence
· Detailed information about the primary products and materials that will be used
· The total price, including any finance charges
· The hourly rate for labor, if applicable
· Information concerning any warranties provided by the contractor
· The contact number for the Department of Community Affairs
· Specific language concerning the client’s right to terminate the contract
This is all in addition to documentation that must be provided to the client, including the warranties of any products used and the certificate of Commercial General Liability along with the insurance company’s phone number. Some of this information must be in a specific place on the contract (e.g., first page) and in specific type print.
However, just because there are a plethora of regulations that must be included in the contract, doesn’t mean that the contract cannot also work for you as the contractor.
A Contract That Protects You
A professionally drafted contract can comply with NJ regulations and protect you from litigation while optimizing your likelihood of collecting payment for the work you and your company perform.
The contract can set forth specific terms of payment that are beneficial for your company. In addition, you can include an arbitration clause that encourages alternative dispute resolution, which will often lead to faster and more economical resolution of any conflicts that do arise between you and your client. Specific language can also be included to ensure that unexpected implied warranties are not included within the scope of work you provide to the client.
A well-crafted contract is an investment in your business. It can ensure regulatory compliance and make it easier for you to collect payments for work you perform. Contact our offices today to ensure your contracts are working for your business!
Did you know that even a mere technical violation of the regulations can subject you to treble (triple) damages and responsibility for the plaintiff’s attorney’s fees under the Consumer Fraud Act (“CFA”)? In fact, the homeowner does not even have to prove that they suffered an actual loss- a technical violation is sufficient! In BJM Insulation and Construction, Inc., 287 N.J. Super. 513 (App. Div. 1996), the appellate division held that incurring attorney’s fees alone are sufficient to prove an ascertainable loss under the CFA. Furthermore, under Cox v. Sears Roebuck and Co., 138 N.J. 2 (1994), the award of attorney’s fees and treble damages to a plaintiff who proves a violation of the CFA is mandatory. The judge does not have the discretion to lower the damages.
If this seems punitive, it’s because it was intended to be! NJ legislators have created an extensive regulatory framework to protect homeowners from unscrupulous contractors. So, how do you protect yourself and your business from accidental technical violations under the CFA?
A Contract That Complies with Regulations
The easiest way to shield yourself and your business from attacks for technical violations of contractor regulatory law is to comply! A well-crafted contract can maximize compliance with contractor regulations, foster good relations and trust with your clients, maximize your likelihood of collecting timely payment, and minimize the chances of litigation.
To comply with regulatory requirements, the contract must detail specific pieces of information. Some of the information that must be provided is:
· The name and legal address of the contractor and the person or agent who negotiated the contract for the contractor
· The contractor registration number
· A description of the work that will be completed
· The timeline in which the work will be completed and the date on which work will commence
· Detailed information about the primary products and materials that will be used
· The total price, including any finance charges
· The hourly rate for labor, if applicable
· Information concerning any warranties provided by the contractor
· The contact number for the Department of Community Affairs
· Specific language concerning the client’s right to terminate the contract
This is all in addition to documentation that must be provided to the client, including the warranties of any products used and the certificate of Commercial General Liability along with the insurance company’s phone number. Some of this information must be in a specific place on the contract (e.g., first page) and in specific type print.
However, just because there are a plethora of regulations that must be included in the contract, doesn’t mean that the contract cannot also work for you as the contractor.
A Contract That Protects You
A professionally drafted contract can comply with NJ regulations and protect you from litigation while optimizing your likelihood of collecting payment for the work you and your company perform.
The contract can set forth specific terms of payment that are beneficial for your company. In addition, you can include an arbitration clause that encourages alternative dispute resolution, which will often lead to faster and more economical resolution of any conflicts that do arise between you and your client. Specific language can also be included to ensure that unexpected implied warranties are not included within the scope of work you provide to the client.
A well-crafted contract is an investment in your business. It can ensure regulatory compliance and make it easier for you to collect payments for work you perform. Contact our offices today to ensure your contracts are working for your business!
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