Get Ahead in Your Personal Injury Case

6 Provisions That Belong in Every Construction Contract

20 May 2020 by Kenneth Pierce

When a construction lawyer sits down to draw up a contract, there are six provisions they'll always want to include. It's important to understand these provisions rather than just leaving the legalese to your construction attorney.

1. Payment Provisions and Contingencies

Nothing should be paid without certain contingencies that follow. The exception to this is the initial payment because it is necessary to make a contract at all and to activate it. Likewise, tranches should be structured to ensure that new money comes into the project as different stages are finished. Not only will this give the construction contractors an incentive, but it will provide cash to pay for materials and subcontractors.

2. Risk Shifts

Risk in any contract should land with the party that's most able to mitigate it. For example, a general contractor should take on the risk associated with workplace injuries and property damage. All parties should be properly licensed, and their insurance policies need to be reviewed to verify that they can cover the associated risks, too.

3. Subcontractors

The burden of paying subcontractors should be shifted entirely to the contractor, and provisions should clearly state that those parties will only be paid under specific circumstances. Likewise, a third-party assignment clause is sometimes included to empower a general contractor to designate work to various subcontractors.

4. Delays

Contract provisions should cover who will accept the cost of legal damages associated with delays. Similarly, it should be clear what counts as a delay. Force majeure provisions should also be carefully written to account for all reasonable scenarios.

5. Right to Cure

A right to cure refers to the idea that contractors should have a right, within reason, to fix mistakes or avoid breaches before the contract can be terminated. This is a protection for the contractor's benefit, but it also allows the property owner to show to a court, if necessary, that all sensible remedies were exhausted before litigation commenced.

6. Changes

The terms for making changes need to be abundantly clear. This is particularly the case with changes that deviate from architectural and engineering plans. Appropriate parties should be incorporated into the contract to ensure their interests are protected, too. For example, your architect should have the chance to review and sign off on changes to both the designs and materials used. Otherwise, there is a risk that you or your contractors will end up on the hook for damages caused by structural failures.

Share

Search