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Lucy, Esq.
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If a homeowner decides to cancel a contract after 20days.

Resolved Question:

If a homeowner decides to cancel a contract after 20days. What percetage if any can a contractor charge for cancelation of contract?
Submitted: 5 years ago.
Category: Legal
Expert:  Lucy, Esq. replied 5 years ago.

My name is XXXXX XXXXX I'd be happy to answer your questions today.

If the contract doesn't provide a specific fee for cancellation, the contractor wouldn't be able to assess a fee. However, he can sue for damages. Typically, what he would be entitled to is the profit he would have made if he had completed the job.

If the contractor wants to put a clause in the contract allowing the fee, it is enforceable as long as it's a reasonable estimate for what the contractor would be out if he wasn't allowed to keep the job.
Customer: replied 5 years ago.

So what percentage is resonable, there has to be a limit stated some where.

Expert:  Lucy, Esq. replied 5 years ago.
I'm sorry - there isn't a specific statute I can state that gives a specific percentage. This is an issue that is dictated by common law, which is based on court decisions. If the penalty is too high, it would be considered a penalty for breaking the contract, and it would be unenforceable. For example, a 75% penalty is clearly too much. A 5% penalty is probably allowed. But there's a lot of gray area. Look at the contract to see what percentage of costs the contractor has listed as a profit. Anything at that percentage or below is probably OK. If it's more than that, it's probably not.
Customer: replied 5 years ago.
What is the code that states that the contractor has the right to charge at all? Can not believe the state contractor's board has not identified this issue. Some laws are forceable even if they are not on the contract. for example workercomp, lien law, 3 day concelation law etc.. So need to know solid info.
Expert:  Lucy, Esq. replied 5 years ago.
There isn't a code section that says that a contractor can charge a fee - that's what I said. It's common law, which means that judges will sometimes allow a liquidated damages clause in a contract, if the amount is a reasonable estimate of the contractor's damages at the time the contract is written. It's true that some laws will be enforced whether addressed in the contract or not, but this is not one of those situations. Most contracts principles are dictated by common law, not statutory schemes. The fact that there isn't a statute to cite doesn't mean that the information is not "solid."
Customer: replied 5 years ago.
Thank you for the explanation on common laws. In this case I'm the contractor. Just needed some info to tell the home owner. You where very helpful..thank you.
Expert:  Lucy, Esq. replied 5 years ago.
You're welcome. Good luck.
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