ConstructionPro Week, Volume: 5 - Issue: 17 - 04/29/2016

Consumer Protection Statutes Are a Trap for Unwary Contractors

By Bruce Jervis

 

Most states have enacted consumer protection statutes governing construction or improvement of residential property. These laws spell out in detail the required elements of a valid written contract, including notices to homeowners of their consumer rights. Failure to comply renders the contract void and unenforceable.

 

An unenforceable contract is a disaster for a contractor. Payment rights and lien rights are compromised. Essentially, any rights the contractor thought it had under the contract may be out the window – even the right to recover on a favorable arbitration award.

 

A Connecticut homeowner recently attacked an arbitration award in favor of a wrongfully terminated contractor. The homeowner contended that the construction contract and its arbitration clause were unenforceable because a notice of cancellation rights did not have the wording and location mandated by the state Home Improvement Act. Fortunately for the contractor, the problem was ruled a “technical deviation” and the arbitration award was upheld.

 

Not all contractors are so fortunate. There is considerable case law where residential contractors have been left without recourse due to the slightest omission or misstatement in their written contracts. Have you seen examples of this? Your comments are welcomed.

 

 

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