To run a business, you need to know you can rely on your partners, customers, suppliers, employees, investors and others. That means you need valid, legally enforceable contracts.
Florida law puts special requirements on certain types of contracts, some of which are of particular relevance to the construction industry. In this blog post, we’ll explore some of these requirements.
The basics of contracts
A contract is a legally enforceable agreement between two or more parties. Traditionally, the only requirements for most types of contracts are:
The first two are self-explanatory. Consideration is something given in exchange. When you buy a shirt from a retailer, your money is your consideration and the shirt is the retailer’s consideration in your sales contract.
If a contract has these three elements, all parties had the capacity to make a contract, and the subject of the contract is legal, then a court will enforce the contract.
When contracts must be in writing
Looking at the above, we can see that not all contracts must necessarily be in writing. In some situations, a proverbial handshake deal can be legally enforceable.
However, under Florida law, certain types of contracts must be in writing. These include:
- Contracts involving the sale of real estate
- Contracts that will take more than one year to complete
- Contracts to pay the debt of another party
- Contracts for sales that total $500 or more
As you can imagine, these requirements cover many situations in the construction industry.
Other special concerns for construction
Florida law imposes some other restrictions that are important for the construction industry. These include:
Lien requirements: Generally, Florida courts will not enforce any clause in a contract that attempts to waive a party’s rights to place a lien on a property. There may be some possible exceptions involving emergency restoration work. Contracts for home improvement must include notices about mechanics’ liens and construction defects.
Contingent payments: Florida courts are very strict when interpreting clauses that make one party’s payment contingent on another party’s payment. If a court finds such a clause to be unclear, it will interpret it to mean that the parties have a reasonable time in which to make their payments.
These are just some of the areas in which Florida places certain limits on construction contracts. There are also special requirements for public projects and many more situations.