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-   -   A few thoughts on contracts. (http://www.gopherforum.com/showthread.php?t=6589)

StartALawnCareBusiness 02-24-2008 12:53 AM

There has been quite a bit of discussion here lately on the subject of lawn care contracts. *Since it is the time of year for contracts and getting new customers, I want to take a few minutes to share my thoughts on this subject. *

My writings ARE NOT legal advice by any means. *They are just my opinion based on being associated with the lawn care industry since 1992.


Definition of a contract: *

In my college business law classes, I was taught a contract is composed of three criteria: *
1) Offer *2) *Acceptance *3) *Consideration. *Consideration comes from the fact that the offer and the acceptance are reasonable in the eyes of the law.


When you say *"Mrs. Jones, I will do your lawn for $35." *That is an offer.
When she says "Yes, I will pay you $35 to mow my lawn." *That is an acceptance.

The above discourse, at the moment of acceptance (given reasonable consideration), forms a verbal contract.

Need for a written contract:

The detail of a contract depends on the level of protection you want to be afforded by that contract. *

Do you really need a 12 page legal document drawn up by a legal team just to do a $35 lawn? *
Probably not.

Do you need an extensive written contract detailing all duties and eventualities for a 3 year, $500,000 right-of-way mowing contract? *
Probably so.


It has been my personal experience that if you are doing a $35/week residential yard it is not necessary to have a written contract. *

Why might you NOT need a written contract?

1) Customer relationship. *Lawn care is a relationship business. *People want to do business with people they trust. *I have found the vast majority of lawn care customers are honest and willing to have a good relationship without need of a written contract.

2) Lack of significant damages. *If you have a contract with a $35/week customer and that customer decides to breach his end of the deal, how much are you really damaged? *If you pursue this customer you will waste hours and days of time trying to collect $35/week instead of simply finding a different $35/week customer who willingly pays you for your work.


Why might you NEED a written contract?

1) *If you will be damaged significantly due to breach of contract. *

Example A: if a customer calls you in November for leaf cleanup and promises to hire you next summer to cut the grass. *You are doing one of the more difficult jobs of lawn care (leaf cleanup) with the expectation that income will be produced throughout the following year. *If you are not hired to cut the grass next season, you might be unreasonably damaged by loss of income.

Example B: *if you are hired to mow a very large area of property for which you need to purchase additional equipment, hire additional employees, and/or set aside other customers in order to do this work. *If any of these (or other conditions) apply and the new customer breaches his end of the bargain, you might be damaged from the loss of income.


2) *To protect the customer against higher costs.

Example A: *If a lawn care operator provides full service lawn care including end-of-season fertilizing, aerating, and overseeding, the LCO needs to order supplies based on expected demand. *If he has 20 customers each needing 80 lb. of 10-10-10 fertilizer, he can bulk order to reduce costs. *Let's say it is November and the LCO only has enough fertilizer to service those 20 customers. *If a 21st customer steps in and want a fertilizer job, the LCO will have to charge much more for the one-time service. *However, if the customer had signed a contract for 1 year's worth of total lawn care beginning the previous April, he could have received a greatly reduced price on the fertilizer job.

Example B: *If a customer wants his grass cut "no less than every two weeks and/or when the grass reaches 5 inches in height." *In this example, the customer wants to know an upper limit to his payout. *If it is a dry summer, the LCO might only have to mow every 14 days. *However, if it is a wet summer the grass might need to be cut more often than 1 time per week. * The customer is protected agains an unusually rapid growing season while the LCO hopes it doesn't rain at all.


These are just a few opinions off the top of my head. *


Let me hear your thoughts:

Keith

Steve 02-24-2008 02:45 PM

Keith,

Very interesting points! Do you think we have seen a trend more and more for small start up lawn care business owners to want to use contracts where they are not needed?

Do you think these businesses should focus less on contracts and more on building relationships with their customers?

Is the usage contracts more and more lately a symptom of worsening customer and service provider interaction?


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