Co-author: Trevor Lawhorn
As evidenced by the unprecedented arctic weather last week and the resulting fallout, emergency construction services are essential. Freezing temperatures, hurricanes, tornadoes and other natural disasters lead to a high demand for remediation and reconstruction services. Contractors are often best positioned to provide the necessary emergency construction services to rebuild businesses, residences and communities. Emergency contractors must always be mindful of certain laws that impact how they conduct business after a disaster. Understandably, Texas has implemented a number of laws to protect disaster victims against predatory or otherwise unsavory business practices. Here are a few essential Texas laws that both owners and contractors must consider when contracting for emergency construction services.
As one might suspect Texas law makes it illegal to sell or lease fuel, food, medicine, lodging, building materials, construction tools or other necessities at an exorbitant or excessive price following a disaster. “Price Gouging” constitutes a violation of the Texas Deceptive Trade Practices—Consumer Protection Act (DTPA). Violators of the DTPA may be liable for attorneys’ fees and increased damages. While the DTPA does not define what increase in price constitutes price gouging, other states say that increased from 10 to 25 percent may be illegal.
Special Requirements For Out-of-County Contractors
Contractors that have not maintained a business address in the county of the disaster, or an adjacent county, are subject to certain additional requirements. Contractors must ensure their contracts are in writing and contain specific bolded language referring to the Texas Business and Commerce Code’s prohibition against requiring full or partial payments before work begins or partial payments that are not reasonably proportionate to the work performed—contractors must abide by these requirements and not charge customers before work begins or require unreasonable progress payments. These requirements cannot be waived, and a contractor that violates these requirements may also be liable under the DTPA.
Certain door-to-door sales (sales solicited at a place other than the contractor’s place of business) give the customer cancellation rights and impose additional requirements on contractors. If a contractor solicits business via a door-to-door sale, the customer has a right to cancel the transaction within three business days. The contractor must give the customer notice of the three-day cancellation right. The contractor must also provide a contract or receipt showing the date of the sale, the name and address of the contractor, and an address for sending the cancellation notice. These documents must be in the same language that the contractor used in the sales presentation. If these requirements are not met, the customer may be able to cancel the contract.
Contractors who seek to obtain work in the wake of any natural disaster in Texas should evaluate key aspects of their business and sales practices before performing work for any customers. First, contractors should consider whether the price they are charging is unreasonably high. Second, contractors should evaluate their contracts and sales practices to confirm that all necessary notices and information are conveyed to the customer at the time of the sale as well as in the actual contract. Third, contractors traveling to disaster areas away from their usual places of business should ensure that they are proving proper notices to customers and not demanding payments that violate the Texas Business and Commerce Code. Unfortunately, natural disasters are inevitable in Texas. However, contractors can put themselves in the best position to ethically help their community by proactively ensuring that their business is prepared to offer services in a way that does not violate the law.