- SPECIAL REPORTS
- THE MAGAZINE
A contract by definition is “a promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.” Simplified, a contract is “a legally enforceable promise or a set of promises.” Contracts can take many forms; all of them, however, simply assign risk.
When reading the quarterly newsletter for The Arizona State Board of Technical Registration (AzSBTR), specifically the complaints section, you can see that several of the complaints against surveyors could have been eliminated by the existence of a scope of work with the client. This recurring theme prompted the Arizona Professional Land Surveyors (APLS) Association to modify their minimum standards for land survey. One of these modifications included the requirement for a scope of work when conducting business. This modification received mixed reviews by the registrants and members of APLS.
How many times have you performed work with a handshake? This—in the traditional sense—has always been viewed as a contract in its basic form. However, the law requires written evidence of the existence of some agreements before they can be enforced. Some contracts are entered into without complete knowledge of the parties. I was sitting in an airport recently and decided to review my ticket. On the back in fine print it read: “This contract…” The purchase of my ticket entered me into a contract. We enter into contracts every day, yet we never realize it. When you sign a credit card statement, you agree to pay the amount, and the credit company agrees to give you that amount of credit. Of course, both have terms attached.
In our profession, we see or deal with contracts in a variety of forms. Transactions of sale of property, issuance of title insurance and lease agreements are all contracts in various forms. It would make sense for a surveyor to want to use contracts as part of his business. The majority of our work is controlled by minimum standards or state statutes, so why not use these in the language of our scope of work or contract?
Time has always affected our ability to conduct business. The surveyor usually gets a call from a realtor or title agent requesting a survey for a property that will close in two days or even one day. Our inability to say “No” in fear of losing a source of income drives us to go to work. We will always be put in these situations until we change it. We can’t blame our clients when we accept a job with no paperwork. It is solely our responsibility as to what method we use to conduct business. I have found that saying “No” was only hard the first time. Clients expect us to conduct business in a fair and reasonable manner, so why don’t we expect that of our clients? I have found that by holding to principles, we can gain the respect of clients and peers.
Society is continuously changing as needs present themselves. Early in our history surveyors pulled chains and turned angles in order to collect necessary data for the performance of our work. With the invention of the EDM and GPS, this has changed and we have adapted to a new style of data collection. Why are we so stubborn when it comes to writing a contract? Throughout history, surveyors have been among the greatest of writers, not to mention lawyers, such as George Washington and Thomas Jefferson. These surveyors developed the legal framework on which society is based. We develop field notes every day designed to leave a trail for future surveyors to retrace our footsteps. We owe it to our clients to give them a scope of work, payment schedule and payment terms for both parties to sign. That is a contract.
Forms of ContractContracts have two basic forms: bilateral and unilateral. A unilateral contract exists when only one party makes a promise. For example, if a homeowner says to a surveyor, “I will pay you $500 to survey my property,” the homeowner has made an offer of a unilateral contract. This becomes a binding contract once the survey is completed. If the homeowner said, “I promise to pay you $500 if you promise to survey my property,” then a bilateral contract has been created. Both parties have agreed to perform in some manner. The bilateral contract is the stronger of the two; Both parties take part in the agreement. From this point, the promise agreed upon can be written and signed by both parties. This seems to be a stumbling block for most surveyors.
Without the written document, we are at risk. Our duty is to protect the public from harm by holding to the laws of our respective states. When an individual complains against a registrant, the state review boards are obligated to investigate. When there is no written document, it is the individual’s word against the surveyor’s. The board is obligated to protect the public first and foremost.
This structure is one I have found to be effective. I have modified many of the elements to fit different situations, most commonly the Terms of Payment. Most clients work with 30-day or 45-day periods; however, do not be afraid to ask for a time frame that fits your financial makeup. The sooner the better when dealing with money. Consult with your attorney when developing this wording. He or she will be the one to defend you in the event of complications.
When you enter into these agreements, they are subject to “The Capacity to Contract.” By definition, “Capacity to Contract” means that a person’s maturity and mental ability is such that it is fair to presume they are capable of representing their own interests effectively. Most states require workers to be registered to conduct business as a professional. Be sure to check with your state board prior to performance of work as a consultant. You should also be cautious of the extents of your liability insurance. Are you permitted to conduct the type of services within your scope of work? Most insurance companies require a list of services you will provide for coverage. When you are not covered for this work, they can sometimes develop riders for the additional coverage.
You need to proceed with caution when entering into a contract of any type. It is a part of doing business that can be very simple—or extremely complex if complications or misunderstandings arise. If the contract is developed properly, misunderstandings should be few.
The assigned risk within a contract is most always an assumed one. Both parties will have assumptions in regard to the other’s performance and risk. The surveyor is assigned the risk of performance under the laws that govern his work. The client is assigned the risk of payment for that performance. When developing the scope of work, method of performance, time of performance and deliverables, take care how these are worded. Above all, be sure you can accept these risks before signing the contract. If you accept the contract and you fail to perform for any reason, the liability is yours. This liability can be minimized if you perform two simple tasks: review and understand your scope of work, and stick to it. The saying “Nice guys finish last” was probably meant for surveyors. We always do a “little extra” to help a client. Often, these extras cost us either financially, professionally or both.
A note: I recently had the pleasure of attending seminars by Don Wilson and Dennis Mouland. Each seminar was on a different aspect of our profession. I took away from each seminar one common theme: we are quasi-judiciary. Although we are assumed to be expert measurers, we are responsible for the demarcation of boundaries where established by the law. With the development of a sound contract, we can place those laws on our side and allow them to work with us—not against us.
Source material for this article came from my own experience and the text “Business Law and the Regulatory Environment, 8th Edition.”
See POB’s Point of View survey regarding contracts at POB Online. Go to www.pobonline.com and click on Point of View.