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Wisconsin Administrative Code governs home improvement trade practices

The February Wisconsin Lawyer contains an excellent article by Mark Hinkston titled "Written Contract Alternatives." I have a significant concern about an example used to illustrate the various remedies that are the subject of the article.

The example involved a homeowner and landscaping contractor who orally agreed that the contractor would perform extensive lawn care and landscaping services while the homeowner was gone on a lengthy overseas trip. According to the article, the contractor performed the services when the homeowner was gone but the homeowner refused to pay for the services when he returned.

Before discussing the possibility that the contractor would have a claim for breach of oral contract, quantum meruit, unjust enrichment, or promissory estoppel, the author observed the contractor "imprudently" failed to get a retainer before undertaking the job. While I agree that a retainer would have ensured payment, it opens a can of worms that the contractor probably would not have considered and the author failed to point out.

The Wisconsin Administrative Code contains rules governing home improvement trade practices.¹ The Code contains a definition of "home improvement" that probably includes the landscaping work described in the article.² Prominent among numerous other requirements is a Code provision that contracts "requiring any payment of money ... prior to the completion of the seller's obligation under the contract" be in writing and signed.³

The contractor's failure to conform his business practices to what the Code requires can result in drastic consequences that could be far more severe than the prospect of not getting paid for the services. The Legislature felt it was so important for contractors to do what the Code requires that Wisconsin law provides that even unintentional violation of any Code provision is a crime.⁴ Thus taking a retainer without a signed, written contract in this situation could expose the contractor to the risk of a criminal record and the possibility of a fine or jail sentence.

In addition, a contract that omits elements required by the Code is void and cannot be the basis for contractual recovery.⁵ This would prevent an attempt to assert an oral contract, which was the first option explored in the article. While violations of the Code will not usually prevent a contractor from recovering under the equitable remedies described in the article, it certainly could deprive the contractor of the profit portion of the bill.⁶ There also is a real possibility that where the contractor is attempting to be paid for disputed extra charges, recovery (even in quantum meruit) may be limited to the amount originally agreed upon.⁷

While the most obvious potential Code violation suggested in the article was the possibility that a contractor might take a retainer without getting a written agreement signed, it is not the only concern. Once a contract is obligated to be in writing, the Code requires that the writing contain numerous provisions, including but not limited to, a description of the work to be done, a beginning and completion date, total price (or method of computing the same), and so on.⁸ Moreover, the Code requires home improvement contractors subject to the Code to avoid a list of "prohibited trade practices" whether or not the contract is required to be in writing.⁹

Finally, if a homeowner suffers pecuniary loss due to a contractor's violation of the Code, a lawsuit on the homeowner's behalf can recover twice that pecuniary loss and, in addition, reasonable attorney fees.¹⁰

The Administrative Code rules governing home improvement trade practices pose very severe consequences to contractors who are, by and large, ignorant of the fact that it applies to them, or what it requires of them. It is prudent for attorneys who have clients in home improvement businesses to be aware of the Code and it's requirements. Advance warning about the Code requirements could save a contractor client considerable expense, risk, and embarrassment.

¹ Wis. Admin. Code - ATCP 110, titled "Home Improvement Trade Practices."

² "Home improvement" ... includes but is not limited to ... landscaping ... and other changes, repairs or improvements in or on ... residential or non-commercial property ..." ATCP § 110.01(2).

³ ATCP § 110.05(1)(a) and (2).

⁴ See Wis. Stat. § 100.26(3), and State v. Stepniewski, 105 Wis. 2d 261 (1982).

⁵ See Perma-Stone Corp. v. Merkel, 255 Wis. 255 (1949), and Huff & Morse Inc. v. Riordon, 118 Wis. 2d 1 (Ct. App. 1984).

⁶ W.H. Fuller Co. v. Seater, 226 Wis. 2d 381 (Ct. App. 1999).

⁷ See Huff & Morse Inc. v. Riordon, 118 Wis. 2d 1 (Ct. App. 1984).

⁸ ATCP § 110.05(2).

⁹ ATCP § 110.02.

¹⁰ Wis. Stat. § 100.20(5).

James L. Kroner Jr.
La Crosse

I appreciate Mr. Kroner's footnote to my article, apparently triggered by the word "imprudently" in the initial scenario.

Assuming arguendo that the services performed in my example fit within the Home Improvement Trade Practices Code's broad definition of "home improvement," I did not intend to condone criminal indifference to the Code or any other applicable law. The scenario was intended to illustrate that while written contracts are certainly encouraged, orally contracting parties may nevertheless have a remedy.

Implicit in this is the recognition that contractors, whether in home improvement or other trades, should comply with the universe of laws that apply to them. Even if, under Mr. Kroner's analysis, it turns out that the contractor's failure to get prepayment in an oral contract setting was in hindsight actually "prudent," his failure to execute a written contract would not preclude him from suing for breach since he neither "solicited" the homeowner to have the work done nor asked for payment prior to commencing work (the two categories under the Code where a written contract is required).

Mark Hinkston

What Has Been the Most Important, Most Satisfying Use of Your Legal Training?

Think about all the important things you've been able to do with your legal training. What was your most personally satisfying and rewarding experience?

It may be that you averted a client's financial disaster. Maybe you helped to keep a business in a family or an estate solvent for minor children. Perhaps you caught a technical mistake in a law which led to its correction, or you fought for a change in voting requirements and election laws. Maybe you opened the door to justice for someone else, maybe the way you explained the "system" made it understandable, or you helped to keep a matter civil, not criminal. Maybe you saved a life.

The Wisconsin Lawyer is considering an article on experiences lawyers find the most personally rewarding. Please send your experiences to Joyce Hastings, editor, at the State Bar by email or by letter to the State Bar of Wisconsin, P.O. Box 7158, Madison, WI 53707-7158.

Wisconsin Lawyer