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Construction agreements involve good faith and fair deals

On Behalf of | Feb 16, 2018 | Construction Law

When dealing with construction contracts, it’s vital to get the language correct to avoid unnecessary and costly litigation.

Contracts provide protection and shouldn’t be used as swords, but as shields. When one party overzealously or aggressively uses contracts to gain unfair advantage over another party, it’s a violation of both fair dealing and good faith. Those two concepts form the bedrock of all contract negotiations and assure that all parties’ interests are fairly represented.

These implied obligations between the parties still allow for some grey areas. But most people will agree on what is fair even if they tend to quibble over what the contract communicates. Affairs become muddled when contract language lacks clarity.

In one contract law book, the author states, “each party should not only avoid deliberate and willful frustration of the other party’s expectations but should also extend a helping hand where to do so would not be unreasonably burdensome. Contracting parties . . . must recognize the interdependence of contractual relationships.”

In other words, while the parties’ interests may be disparate, the act of entering into a construction contract puts them — at least temporarily — on the same team and bound by actions made in good faith.

At some point in most contractors’ business dealings, they will run into a situation that is destined to involve litigation. It’s not possible to please all clients every time in all matters, but a well-executed contract details the expectations and the consequences when either party falls short of their agreed-upon duties.

Getting it right the first time is important. If you are about to sign a construction contract, make sure that your attorneys reviews the document before putting pen to paper.

Source: Constructonomics, “Good Faith and Fair Dealing: The Essence of Construction Agreements,” John Poole, accessed Feb. 16, 2018