Does It Really Matter What My Contract Says?

Editor’s Note: This is the fifth installment in an eight-part series of posts by Bill Gschwind, business and construction attorney and founder of Minnesota Construction Law Services. Bill brings years of experience helping contractors get paid without wasting time, leverage, or sanity.

To many contractors, the contract is a legal formality. Something drawn up by a lawyer to cover your backside when things go wrong. Something you hope you never have to read again.

But that mindset creates risk. Because a good contract is more than just legal armor – it’s the operating manual for your entire job. And when done right, it’s one of the most effective tools you have for avoiding payment issues.

At Minnesota Construction Law Services, we see this mistake all the time: contractors rely on handshake deals, vague scopes of work, or outdated contract templates they downloaded five years ago. Then something goes sideways, and they’re shocked to find they have no leverage.

Let’s fix that.

Residential vs. Commercial: Know the Rules

In Minnesota, residential contractors are held to a higher standard when it comes to contracts. If you’re licensed – and you should be if you’re doing residential work – you’re required to include specific statutory language in your agreement, including:

• The 514.011 pre-lien notice
• A clear start and completion date
• The 327A statutory warranty notice
• Performance guidelines
• The right to cancel (especially in home solicitation sales)

Leave any of these out, and you risk fines, license problems, or losing your lien rights.

Commercial contractors? You’ve got more flexibility. There aren’t statutes dictating your contract language. But that doesn’t mean you can wing it. In fact, the lack of regulation makes it even more important to be crystal clear about terms, responsibilities, and what happens when things go wrong.

Our advice? No matter the project type, use a well-drafted written contract every time.

Your Contract Should Reflect the Conversation

A good contract isn’t something you slap on the end of a deal. It should memorialize the conversation you’ve already had with your customer.

• What are you building?
• What’s included (and what’s not)?
• How much does it cost?
• When is payment due?
• What happens if there’s a change, delay, or disagreement?

In our office, we often refer to the contract as the rules of the game. If everyone understands and agrees to the same rules before the game starts, the odds of disputes drop dramatically.

And here’s a bonus: clear contracts build customer confidence. Vague or confusing ones create hesitation – and invite legal review.

Plain Language Builds Trust

If your customer doesn’t understand your contract, they’re either going to:

1. Ignore it.
2. Hand it to their lawyer.

Neither helps you.

Your contract should use plain, readable language. You should know it well enough to walk a homeowner through every paragraph. And if a customer wants to make a change? Don’t panic. If you’re comfortable with the revision, strike the original text, write in the change, and have both parties initial it. That’s how real business gets done.

Of course, if a customer asks for a change that gives you pause, send it to us. We’ll help you assess the risk and redraft if needed.

Change Orders: The Achilles’ Heel of Most Projects

Most payment disputes we see stem from change orders – or the lack of them. Contractors send a text. The customer says “sounds good.” Work proceeds. Then the final invoice lands, and suddenly the customer has amnesia.

Your change order process must be written and signed. Period.

Whether it’s a paper form, digital signature, or document attached to an email chain, the key is clarity and agreement. Texts and emails might help, but they’re not a substitute for a formal, acknowledged change order.

Contracts Aren’t Speed Bumps – They’re the Foundation

Many contractors see contracts as administrative burdens. Something that slows them down from doing the real work.

But that’s backwards.

The contract is the foundation the rest of the job is built on. It supports the scope of work. It sets expectations. It allocates risk. And it answers the “what ifs” long before they happen.

The more familiar you are with your contract, the more natural it becomes to use it in conversations, updates, and problem-solving. That confidence reduces disputes, accelerates collections, and improves your margins.

The Bottom Line

A good contract doesn’t just protect you – it empowers you. It makes your sales process smoother, your billing cleaner, and your collections easier.

At MNCLS, we draft contracts specifically for owner-operated contractors. We include all the statutory language. We build in collection and legal expense recovery clauses. We tailor them to fit your scope of work and risk profile.

If your current contract is a patchwork of old documents and good intentions, let’s clean it up. It’s one of the best investments you’ll make in your business.