I should know better. With years of experience negotiating contracts for myself, my business, and my clients, I still felt trapped in a home-building situation going nowhere fast. What follows is my recent experience working through canceling a construction contract. Even having experience canceling and exiting other business contracts, I was reminded of key points in contracts and negotiation. Following these tactics, along with legal assistance provided by my attorney, I successfully exited this Contract without litigation while receiving a large portion of my funds back. It must be emphasized that the following is not legal advice. Breaching a contract can have serious financial consequences; professional legal advice should be obtained before any action or decision.

“When the student is ready the teacher will appear. When the student is truly ready… The teacher will Disappear.”

 Tao Te Ching

At the onset, finding a suitable Law Firm/Attorney to help with this matter was challenging. Contract disputes can require litigation; only some attorneys have the necessary expertise. 

Rule zero: Have your Team assembled before they are needed.

My intuition told me to have this Contract reviewed by an attorney before signing. I failed to listen to myself. My “inner voice” is right most times; I have to take the time to listen and act. My cognitive biases worked against me. 

Understandably, contracts could be clearer and more manageable to read and understand. Your attorney is a legal expert, and you are the expert in your business. Ensure the Contract addresses the terms essential for you and your situation. Once the attorney’s work is complete and the Contract signed, you and the other party are left following the terms daily.  

Rule 1: Always read the contract completely, always.

The more times you read it, the less confusing and intimidating it becomes. The attorney’s work is ensuring the Contract meets the legal standards. As a signer, you must understand every “nook and cranny” of the agreement.

Many industries use standard contracts approved by State, Builders, and Realtor Associations. When you read these contracts, you will see many “blank” areas relating to “dates,” “dollar amounts,” and “Other Terms” where exact details relating to your agreement can be added. 

Rule 2: Pay attention to the blank areas.

Ensure all dates, dollar amounts, deadlines, financing terms, and interest rates are included.

“A deal good today, will be a deal good tomorrow, or it’s no deal.” I like to say. 

Remember, even with an industry-standard contract, there should be a section for OTHER TERMS. This is where additional terms not covered in the Contract can be added. The reluctance of the other party to include or negotiate these special terms should be cause for caution.

Rule 3: Never feel rushed, pressured, or in a hurry.

Remember, it is your money and your agreement you will have to live with. Once signed, everyone “rushing” you will be gone. Take your time. If it doesn’t feel right, it isn’t.

Always be Learning. I overlooked Rule 2. Over-trusting the promises led to a “Begin By” date being left blank, leaving the other party with nearly unlimited time; this created an unstainable situation for me.  

“The first principle is that you must not fool yourself and you are the easiest person to fool.”

Richard P. Feynman

Rules 0-3 are instrumental before and during the contract negotiation phase. If done correctly and with foresight, potential conflicts can be reduced.

My project had been underway for nearly six months with little visible progress; something had to change; it was time for action.

The decision was made to cancel the Contract. My attorney indicated the contract terms would make cancellation challenging, making a breach likely, forefitting all funds, and risking penalties and litigation.  

In my attorney’s words:

“The terms of the Contract will make it an uphill battle to get any of your deposit back. But the larger issue is getting you out of the Contract entirely. Your notes on what should have been done and what was not done are helpful.

If the amount in dispute was under $25,000, we could file in General District Court and get a quick hearing and decision from the judge. Unfortunately, if the amount in dispute is greater than $25,000 the only option is circuit court where the discovery process (interrogatories, production of documents, depositions, and experts) make it much more time consuming and expensive process. Getting a trial in Circuit Court can take 9 months to a year.”

So we began. We started by communicating what led to this decision, indicated we desired to be fair and equitable, offered to pay for all services to date, requested a refund of any excess funds, and included a Cancellation of Contract Release form. This approach is the “it’s not you, it’s me.” At the same time, we offered complimenting to him and his Team. 

 “It’s Not You It’s Me”

We never indicated blame or requested an exact amount. I have found the best strategy when negotiating a monetary issue is to let the other party go first—shifting the perceived “power” to their side, reducing defensiveness. In most circumstances, their initial offer is more generous than I contemplated. 

Rule 4: Don’t blame; Offer Compliments; Let the other party go first.

Initial communications indicated his willingness to cooperate; he would get back to us once he calculated his time in the project. His delays dragged on. Every week, we would reach back out by email, reminding him of our desire to resolve this issue and the benefits he would achieve by releasing us from the Contract, i.e., re-selling the property.  

At the end of our rope, with no response and little leverage left, our final communication reiterated our desire to settle this matter quickly and equitably, reminding him that his lack of response left us no choice but to take further legal action.

Rule 5: Never threaten; Let the other party’s actions (or lack of action) determine the course.

Finally, an offer was received at the exact amount I had anticipated. RULE 4 worked. There was no need to negotiate; the Cancellation of Contract form was signed, and the check was in the mail.

This entire time-consuming process proved stressful and emotionally draining. I was more critical and upset with myself. I should have known better. I would have been better off if I only did what I told others to do. I wish to share my learning points through this ordeal as contained in my RULES. I hope you can benefit from my mistakes and learn from them.

Rule Zero: Have your Team assembled before they are needed.

Rule 1: Always read the contract completely, always.

Rule 3: Never feel rushed, pressured, or in a hurry.

Rule 4: Don’t blame; Offer Compliments; Let the other party go first.

Rule 5: Never threaten; Let the other party’s actions (or lack of action) determine the course.

I hope this post prevents someone from making the errors I did.

Never stop learning.

David