What are construction contracts?
Construction contracts are written agreements between contractors and customers that spell out the rights and commitments of both sides in relation to work which will be performed by the construction contractor. A construction agreement may allow for termination for justification or convenience. Ending a contract for reason may occur when one party stops work because of the shortcomings in overall performance by the other party. On the other hand, contracts can be terminated for expediency happens when the owner ends a job for reasons other than a problem in effectiveness by the construction contractor. The dismissed entity will have little alternative in a cancellation for cause; however, a general contractor has appreciable liberties against a customer who terminates for convenience, but does so in poor faith. While all business professionals should have a contract for customers to sign prior to undertaking any work, it is especially vital for construction contractors to do so as most states require a formal contract when providing construction or home improvement services.
Prior to signing any construction contract, each party must take the time to review carefully and become acquainted with the stipulations set out throughout the agreement, along with the legal specifications accompanying a mechanic’s lien, notices about bond payments or stop payments. Doing so will lower your threat of costly litigation, and you will be a lot more likely to be able to collect your fees and guard against invalid claims against you, as well as prevail in any dispute and/or litigation.
What to include in a construction contract
The written agreement will include building plans. While you may prefer to defer until the plans are eventually certified for issuance of a building permit before signing the building contract, frequently clients will not want to wait. They want to have a building general contractor at the ready so the work can get started immediately upon receiving the building permit. That means a contract signed before plans are approved is based upon bidding plans that architects draw up. Changes between the bidding plans and approved plans could be problematic if provisions for this are not spelled out in the contract. If construction contract costs are derived from unapproved plans, protect yourself by using the date on the bidding plans to reference the specific blueprint on which the bid is based. This way you can trace the source of the estimate costs.
A poorly drafted construction contract could spell disaster. Be sure to have a lawyer check the contract to make sure sufficient provisions are included to resolve the situations outlined earlier, such as termination provisions, payments, and revised estimates for approved plans, among other contingencies. The takeaway is that construction contracts protect you and are crucial to sustaining the business you have fought so carefully to maintain. Below is a sample construction contract.