Saturday, May 5, 2012

Contractors Should Always Say “We” Instead of “I”

You spend a considerable sum of cash to have your lawyer set up your contracting business as a corporation, an LLC or LLP, so that your backhoe, your pickup and your tools may be at risk, but your house, your Cadillac and the money you have set aside for sending the kids to college is not exposed. Then you walk onto a job site or into a customer’s office and tell them “I guarantee the work,” and all that costly legal paperwork goes right down the drain.

As a court in Pennsylvania recently held, and as most other courts would follow, using the word “I” can expose you to personal liability where your business would otherwise be the only entity responsible under a contract or statute respecting the project. “We” refers to your corporation, company, business or firm; “I” refers to yourself personally – you can’t afford to ever forget the difference.

The Pennsylvania case is Bennett v. A.T. Masterpiece Homes, 2012 Pa. Super 60 (2012). Two home buyers sued A.T. Masterpiece LLC and its managing member Grant Colledge for construction defects in their brand new homes. A jury verdict against both A.T. Masterpiece and Colledge personally was affirmed on appeal, though Colledge argued that the home buyers had contracted only with A.T. Masterpiece, and not with him individually. The Pennsylvania Superior Court, in affirming the verdict and judgment against Colledge individually, held that Colledge’s statements at the construction sites to the homeowners that “I guarantee it,” or “I will take care of it,” constituted a personal assumption of liabilities for correcting the work of his business which he would not have had in the absence of his remarks.

So, whether your name is Colledge, Walsh, Turner, Pepper or something else, “we” refers to your contracting business, and “I” refers to yourself personally – you forget the distinction at considerable financial peril.

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