A construction contract’s goal is to outline work to be done. A well-drafted document will outline terms for cost, deadlines and conditions for payment. The contract should also specify the obligations they fulfill and the potential problems in fulfilling (or not fulfilling) the services or products in the contract.
Before signing on the dotted line
All parties involved in the agreement should read the document thoroughly. Important issues include:
- Time frame: This should consist of a sensible deadline for fulfilling obligations. It should also outline whether it is a month-to-month or a long-term agreement.
- Prices: The prices should be transparent. Be careful to note any additional charges not previously discussed.
- Payment: A party may try to negotiate a payment schedule that matches the business’s cash flow, such as stipulating amount at the end of the month when bills are due.
- Penalties: There may be penalties for late payment, but be sure that these are fair.
- Materials: The terms should outline the materials built into determining the budget.
- Rules specific to industries: Many industries must follow certain local, state and federal laws. The contract should reflect these.
- No final agreement: Major projects will take years and maybe undertaken using an interim contract to be finalized at a later date.
- Dispute resolution: The contract will likely outline a type of arbitration to avoid litigation, at least initially. This includes responsibility for attorney’s fees.
- Anticipated issues: A party may have experience in problem-solving certain matters as part of their expertise, but the other parties should make sure that the solutions do not unfairly benefit the problem solver.
It is best to review all contracts
It is smart to have an attorney who understands construction laws here in California to review a construction contract. These agreements can be quite complicated and involve a lot of money, so it is best to make sure that the terms are fair and equitable while addressing any foreseen issues.