The regulation mandating written contracts, established in late 2010 and amended in 2019, is a crucial component for professionals whose work relies on client agreements. According to NAC 625.545, each client must have a written contract before any work begins.
The Board has received numerous complaints that could have been avoided with clear and understandable written contracts. The regulation specifies that:
“Before performing any work, a licensee must enter into a written contract with each client.”
The importance of the scope of work (SOW) requirement is emphasized as it forms the foundation of the contract. A well-defined SOW protects both parties by minimizing confusion and misunderstandings. It should clearly outline project parameters, including type of work, timeline, methods, techniques, deliverables, and financial terms.
Professionals are advised to use language that is accessible to clients while maintaining necessary technical terminology. Open communication is encouraged to prevent misunderstandings from arising.
A common source of complaints involves unexpected costs: “A client expected to pay X but was charged Y.” Clients often feel surprised by additional costs not included in the initial contract or misunderstanding ‘change orders.’ Including “what-if” clauses can help manage expectations and avoid disputes.
Estimating third-party costs can be challenging; however, providing explanations about potential increases can prevent future issues. Similarly, estimating project completion time can be difficult due to unforeseen delays. Including provisions for such delays can facilitate smoother interactions with clients.
Section two of NAC 625.545 added in 2019 requires full disclosure regarding professional liability insurance but does not mandate its purchase.
NAC 625.545 should be seen as a guideline for crafting detailed contracts that prevent disputes while meeting legal requirements.
