A well-drafted contract is better than winning a lawsuit. Having good relations with your business and construction partners is always better than going through legal fights. Clear and simple language in your contracts can help avoid expensive court cases.
Here are some essential things to include in your contracts:
Key details
The contract must identify the contractor, the property owner, and any other involved parties, including their contact information and license numbers.
It must lay out the scope of the work, including every detail, such as material specifications and construction design plans or drawings. It must also specify the project timeline and payment terms, including the project’s start and completion dates and critical milestones. You may also add progress payments if the contract specifies vital milestones.
The contract must also account for changes in the project’s cost due to market price fluctuations, with each change documented, approved and compensated as it occurs.
Permits, insurance and warranties
Identify who is responsible for obtaining all the necessary permits and approvals, including relevant deadlines and conditions. Specify what type of insurance the project will use and bond requirements, if any. If the contractor provides any warranty or guarantee, the contract must include the duration and process for addressing defects.
In addition, lien waivers and safety compliance clauses should also be part of the contract.
Termination and dispute resolution clauses
A process must outline the agreement if either party wants to terminate it. Adding a mediation or arbitration contract clause in case of a dispute is also advisable.
Many other details might need covering in the contract. Every construction project is different, so every construction contract would be different.