Second coats on similar colors are almost never recogicnized as being needed until the coat is applied and has dried. ONLY THEN WILL YOU SEE WHETHER IT NEEDS A SECOND COAT or not. Yes, painters can use a cheaper paint then what you paid for. That is solved by getting your own which, I would charge extra for because I will always have to go get more, or add second coat because home owner tried to skimp on paint, or they got the wrong color etc...
Good contracts include descriptions of prep work and repairs; paint specs by brand name, type, color and product number; the number of coats; and a full description of the work, including frequently omitted items such as cabinet interiors and shutters. Minimize delays by specifying that, weather permitting, work will be continuous. Get a payment schedule that minimizes the down payment — the more payment you can withhold until the end, the more leverage you'll have to get the job done well and per your specifications. Insist that contractors provide proof that they carry both general liability and workers' compensation coverage.
When you choose CertaPro Painters® for your exterior painting services, you can be confident that you’ll get the highest quality paint job from an experienced team of expert painters. At CertaPro Painters®, our goal is to deliver extraordinary experiences. We do the painting, so you can do life. When you’re ready to schedule your free painting estimate, contact us.

With that said, here's the reality of that particular scenario. Painters do put water in the paint, but not for reasons you would think. Some materials need to have their viscosity manipulated in order to slow drying time, allowing gravity to 'smooth' out the product for a better finish. It also prevents 'drags' and 'sausages'. I personally try not to do it too often, but from time to time I have to. I want my client to have a proper finish.
Recently I had the outside of my home painted. The contractor wrote a good contract, but I failed to realize that some things were not in it. It reminds me of the car dealer who offered a good price on a new car but failed to mention that it did not include tires. My contractor failed to specify that lattice under a porch was included. So the painters did not paint it. To his credit, he did instruct them to paint it when I brought it to his attention. If I had the job to do over again I would look for an individual who came with referrals from happy customers rather than a franchise owner..
The Lead Renovation, Repair and Painting (RRP) Rule establishes requirements for firms and individuals performing renovations, and affects contractors, property managers, and others who disturb painted surfaces.  It applies to work in houses, apartments, and child-occupied facilities (such as schools and day-care centers) built before 1978.  It includes pre-renovation education requirements as well as training, firm certification, and work practice requirements. 

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