When Jim Sasko (Big50 2002) of Teakwood Builders returned to Saratoga Springs, N.Y., from a business/pleasure trip to Mexico, he learned a client, a health practitioner, had been charged with double billing patients. In Sasko's absence, his controller, Sarah Hislop, sent a letter to the client on learning of his arrest, stopping work on his $160,000 addition. She sought assurance that the contract would be carried to completion and suggested a meeting when Sasko returned.

Sasko said the client had $13,572 down when the job stopped and was approaching a $27,000 draw. Sasko met with the client (released on bail), who was angry the job had been stopped. The client promised a letter from his attorney saying there was no reason why he couldn't pay his bills, as his assets weren't frozen. Sasko consulted his attorney, who told him no clause in his contract allowed pulling off a job for an arrest. And, if the client was able to make payments, Sasko was obligated to finish.

“I took a step back, thought, ‘Well, we agreed to a contract, what happens from here, I'll try to ignore.'” The remodeler apologized to the client for the three-day delay in construction and resumed construction. “Everything from there went fine.”

Although the client was difficult, payments were made on schedule. He later chose to surrender his medical license, pay $100,000 in restitution, and serve five years' probation rather than go to trial.

Lesson learned: You can't anticipate an event like this, and there's no way to write preventive language in your contract that wouldn't offend clients, Sasko says. In the worst case scenario, your client is jailed and can't pay. Then you can place a lien on his property.