Any construction project in Florida will involve the execution of numerous contracts. These contracts establish how much the builders, contractors and subcontractors involved in the project will be paid and what will happen if either party fails to perform their duties as described in the contract. The following is some information on four common types of construction contracts.
A fixed-price contract is one where the parties agree on one total price for all activities covered in the contract. Sometimes these contracts include provisions regarding early termination and liquidated damages that could be incurred in the event of a later termination.
A cost-plus contract covers payments of actual costs, expenses and purchases that stem from the construction activity itself. A cost-plus contract must include provisions that cover the contractor’s overhead and profit.
Time and materials contracts
A time and materials contract may be appropriate if the scope of the project is still open-ended. Generally, a time and materials contract will include provisions that establish an hourly or daily rate. In addition, time and materials contracts will have provisions covering additional expenses that may come up in the scope of the project.
Unit pricing contracts
Unit pricing contracts are often sought by builders and federal agencies. A unit price can be established during the bidding process. The owner of the property will ask for a specific amount of materials. It will set pricing for a pre-determined amount of these materials.
Different types of contracts for different goals
Ultimately, there are many types of construction contracts that can be achieved to meet the many goals of the project. Contracts can be specialized to cover the unique needs of the project. Boilerplate contracts can seem like a good way to meet your goals, but they are often vague, incomplete and ultimately unenforceable. Instead, you will want to work with a professional when executing a construction contract to ensure it is fair to both sides and meets your needs.