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Be wary of ballpark estimates in a contract

If you consider signing a contract that does not really specify the financial details, instead giving you a ballpark estimate that may or may not be accurate, you need to be concerned. Take the time to look over the details and don't sign anything until you really understand what you're agreeing to.

For instance, maybe you're hiring a contractor for a construction project. You know what your budget is and what the fair market value is. Rather than giving you a direct bid with a stated cost, though, the contractor gives you a ballpark estimate with a rough range of possible prices.

Upon completion of the job, the real cost is twice what you thought you were going to pay.

You can see how problematic this is going to be. In some cases, a contract with a ballpark estimate may not even be valid.

That's not to say that all contracts have to predict the cost exactly. With things like construction projects, there are unexpected costs.

However, the contract can be drafted to address that. For instance, it may offer you the projected cost that does not include materials, in case the price of materials goes up during the project, or it may have a clause saying that you'll discuss payment again if there are major changes to the scope of the project after it is already underway.

The key is to make sure that both sides really know what they're agreeing to and what they're obligated to do. If problems with the contract lead to a dispute, then you need to know all of the legal options you have.

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