When homeowners hire a contractor, they want the work to be done properly, on time and on budget. If a mistake is made or a problem arises down the road, homeowners want to know that the contractor will stand behind their work and provide prompt and satisfactory warranty service.

When you have a written contract, the potential for misunderstandings between you and your contractor is reduced, and you are in a much better position to demand satisfactory service if the contractor lets you down. On the other hand, if you get involved in an underground "cash deal" without a written contract, problems are both more likely to occur and be much harder to resolve.

A proper, written contract sets out what you and your contractor have agreed to. For a new home building or renovation project, the contract should include details of the design, material and product specifications, the project schedule, costs and payment arrangements, etc. For simpler home repair jobs, less detail may be needed, but it should still cover all of these important points. And in all cases, the contract should provide a clear warranty on the work-what's covered and for how long.

So what happens if the work is done incorrectly or is of poor quality and you don't have a written contract? If you and the contractor cannot agree on matters, you may have considerable difficulty taking action to protect your interests.

If you choose to take the contractor to court (which may be your only option), not having a written contract can cause problems. It's likely that you and the contractor will have different opinions on what your "deal" was. So the judge will have to decide who to believe, or determine what seems fair, given the circumstances. Either way, the final result may not be to your liking.

Having a written contract cannot prevent all problems from occurring, but it can make them less likely and a lot easier-and far less expensive-to resolve.