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Question added to topic Legal Basics For StartupsJuly 11, 2008

Is a signed work order an acknowledgment of indebtedess?

A work order constitutes an agreement to perform a service. Indebtedness does not occur until the service is performed. So does a signed work order acknowledge an indebtedness?
A signed work order is not necessarily an acknowledgement of indebtedness. The person or company signing the work order simply reflects both sides' agreement about the work that will be performed. If you don’t perform the work, the other side is not indebted to you. If you perform work, but not according to the work order, you may not be able to collect, as you did not provide what the customer wanted (thus, the reason for “change orders”).

Your work order should include payment provisions or estimates of what the work will cost. Otherwise, even if you do perform the work--and the work order could serve as evidence of what was ultimately done--you can get into a dispute about the dollar value of the work performed.

Nina L. Kaufman, Esq. is an award-winning New York City attorney, edutainer and author. Under her Ask The Business Lawyer brand, she reaches thousands of entrepreneurs and small business owners with her legal services, professional speaking, information products, and LexAppeal weekly ezine. She also writes the Making It Legal blog.

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