In this day and age, text messages are one of the most common forms of communication. But what happens when contractors and subcontractors make important deals on construction jobs via text?
We recently conducted a survey of construction lawyers in our Attorney Network regarding common pitfalls for contractors. In the process, we revealed an unexpected consensus: text message deals are a more prevalent issue in the construction industry than you might think. Attorneys agree that agreements or change orders handled over text can lead to payment disputes and legal troubles down the road.
Are text message deals the new handshake deals?
Lawyers have been warning their construction clients off handshake deals for decades. A handshake deal is the colloquial term for any agreement made without the inclusion of an official written contract.
Handshake deals may get made when the parties already have a previous relationship or have worked together before. Other times, it may be a practical matter. Maybe the GC is trying to get work started as soon as possible and an agreement is reached with the intent of putting it in writing at a later date.
Text message deals likewise rely on trust in lieu of a proper contract. Attorney Adam Edgecombe says, “While texts are certainly convenient and sometimes acceptable, they are not a good method for substantive communications that can have legal implications for the contractor.”
Lawyers stress the importance of recordkeeping
Oftentimes clients don’t come to construction lawyers until after an issue has already come up. However, effective recordkeeping on projects from the get-go can not only provide protection should problems arise, but construction attorneys suggest it is one of the most effective means for preventing issues in the first place.
Recordkeeping starts with a sound and comprehensive contract, but goes well beyond that. All pertinent communications and discussions about a job should be documented. Accurate records of work completed are key. Any and all change orders or changes to schedules should be documented in writing.
To your clients, it may seem like a lot of extra work — or even a waste of time — when they feel they have a good relationship with the people they’re working with.
Lawyer Matthew Lakind tells us, “While staying on top of this type of administrative work can be difficult, especially for small contractors who have seemingly trusting relationships with their general contractors or owners, it is imperative that projects be documented as they occur, so that this documentation can be used later to support your claims in the event of any dispute.”
“The person who leaves the best paper trail usually wins”
One of the reasons text message exchanges are not ideal for conducting business is the lack of a paper trail. Attorney Cathleen Curl says, “People often get new phones & lose old texts, accidentally delete messages, etc. And it’s much harder to print out text messages when needed. They also often don’t show the date when they’re printed out.”
This type of information becomes key should problems arise, particularly if litigation becomes necessary. Cathleen encourages her clients to use email communications in place of text messages. While signed contracts, change orders, and other legally binding documentation is ideal, emails are at least dated, and much easier to keep track of. Should a dispute arise, they will be much more effective evidence than texts.
The handshake deal is as old as business itself, and in the modern fast-paced work environment, jobs and agreements often get coordinated digitally on the fly, without even a handshake necessary. Building trust and strong relationships are an important component of conducting business. However, they should not be relied on in place of proper documentation or recordkeeping.
Cathleen sums it up: “Stop trusting others to remember what you tell them without putting it in writing. Confirm important information from your telephone calls in writing. If you get into a dispute, you can be sure that the other side won’t remember things that discredit their position. Remember, the person who leaves the best paper trail usually wins.”
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