What should a construction contract include?

Contracts can include a construction schedule or dates for the project as part of the contract language. If a schedule is included, carefully review the dates of your work. Make sure you have enough time to get approval for the submission, request materials or equipment, and have them delivered to you before starting work. The purpose of a compensation for damages clause is to include in the contract an agreed amount of money that the landlord can receive in the event that the contractor does not complete his work on time.

With a properly drafted compensation provision, the landlord could submit the defense to the general contractor, who would be obliged to defend and compensate the landlord against the lawsuit. A compensation provision may be declared unenforceable if it seeks to compensate a party for gross negligence or deliberate misconduct. In addition, the payment schedule should be introduced gradually and should never be ahead of the actual work done. It is not recommended to pay for work that has not yet been done.

The price sum clause must also include details about exchange orders. In other words, if a customer changes their mind about the material to be used or if they add scope to the project midway through the process, the part of the contract that appears in the sum of the price must specify how much will be charged for these changes. Some of the information on how changes will be managed, from a financial point of view, is usually included in the price sum clause. However, it is also important that a construction contract has a clause dedicated to change orders.

After all, almost every construction project comes with some unexpected changes. Often, the first thing specified in a construction contract is the agreed total price of the project. Many construction contracts follow a certain format to ensure that appropriate information and details are included. Set a clear notice to proceed, a construction start date and an end date, and be sure to differentiate between calendar days and business days.

Review the list of drawings and specifications and other contract documents to ensure that you have the correct versions of the documents. While this is an element that is often included in most construction contracts, many people tend to overlook the need for details. An escalation clause protects the contractor from a change in the price of certain materials, ensuring that they are not responsible for the additional cost once the contract is signed. For these reasons, it's important that your construction contracts are specific, detailed and adapted to your needs and customer needs.

Suppose a contractor finishes working in the kitchen, but the customer doesn't think the tile is up to the task. Problems often arise in the construction process, and the construction contract determines how these problems are resolved. While this may seem obvious, this often overlooked element of construction contracts is necessary for the contract to be legally binding. Regardless of the type of construction contract, it must be carefully reviewed so that the landlord understands what they are entering into.

A termination clause specifies the terms under which the contractor may choose to cancel the contract and stop working on the project. Contact the experts at the Munizzi Law Firm if you need to have your existing construction contracts reviewed or if you need new ones drafted.

Elbert Thanem
Elbert Thanem

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