Every construction contract is unique. There are many different sections and clauses that may need to be included, depending on the parties involved and the scope of the project. It is very important to draft contract documentation upfront and to understand your rights should a dispute arise.
Below are three examples of key portions of a construction contract and how they may apply.
Identification of the parties
First and foremost, the contract should specifically identify the parties that are involved. This could be a general contractor, a construction company, a subcontractor, a business entity or an individual property owner. If there is a dispute, this helps to establish the relationship between those parties and the obligations they both need to uphold.
Economic details
Next, the contract should discuss all of the financial details. This could include the total price and the draw schedule. Construction companies can be paid in a few different ways, such as being paid a portion upfront, being paid for completing different sections of the project and the like. This section can also identify financial responsibilities, such as which party needs to pay for parts and materials.
Important dates
Finally, the contract needs to include specific dates, such as when the project is going to commence and when it is expected to be completed. There is some level of unpredictability to construction projects, so these dates may need to be changed or modified in the future. But the contract should allow the parties to start out with the same expectations regarding when it will begin and end, and modifications can be made from that point.
If there is a dispute over contract language or allegations of a breach, the parties involved must understand all of their legal options.
