Understanding Common Construction Contract Provisions
If you own a construction business, you know the value of a well written contract. The contract is what defines each party’s role in a project and it sets the expectations of how disagreements will be handled if they arise. While we always recommend working with a Sarasota construction lawyer, it is also important for you as a business owner to understand common contract provisions.
Here are some of the most common provisions:
Scope of Work
The scope of work is a detailed outline of the work to be performed during a construction project by individual parties. When drafting or reviewing a scope of work, it is your Sarasota construction lawyer’s job to ensure that the contract includes a concise and accurate framework of the expectations of all contractors, sub-contractors, and property owners. Anything that falls outside of the scope of work and not included within the signed contract should be followed with a change order and addendum, when additional costs are associated with the change.
An indemnity clause identifies who will be financially responsible for covering damages resulting from third-party lawsuits related to personal property damage or bodily injury. For example, a contractor may indemnify an owner and contractually affirm to take financial responsibility for damages incurred in relation to the work provided. As a contractor, this clause can be especially tricky and your lawyer should attempt to limit indemnification when possible.
Dispute Resolution & Attorney Fees
Construction contracts often include a dispute resolution clause that outlines how contractual disputes will be handled. There are two primary forms of alternative dispute resolution, mediation and arbitration. Often, mediation will be the first attempt at reaching a resolution between parties, but if a mutual agreement cannot be achieved, parties can often move forward with formal litigation.
Arbitration clauses are commonplace in many construction contracts. It is important to keep in mind that arbitration rulings are often final, so make sure you discuss this with your construction lawyer in Sarasota before agreeing to this provision.
Lawyer fees may also be outlined within this section of the contract. Most commonly, the losing party is responsible for paying the opposing party’s fees and costs.
If there is one guarantee in both private and public construction projects, unanticipated changes happen. For this reason, a well drafted change order clause is a crucial element of a construction contract. The change order clause should outline the process of entering a written modification for a change order and the expectations of the contractor and subcontractor responding to these changes. It is best practice to have a standard procedure for delivering revised estimates, completion dates, and project schedule once a written change order has been submitted.
Pay-when-paid provisions are designed to shift the risk of non-payment from the general contractor to the subcontractor. While a standard section in many contracts, this provision is sometimes ambiguous and should be reviewed with your construction lawyer in Sarasota to make sure the pay-when-paid clause is enforceable if you’re a general contractor, and lessen the risk of non-payment for services provided if you’re a subcontractor.
Trent Cotney and our knowledgeable team of Sarasota construction lawyers are experienced in working with contractors and subcontractors throughout the construction industry. Whether it’s drafting or reviewing a construction contract, we are here to ensure your best interests are covered and risks are mitigated before a project begins.
To schedule a consultation with a construction attorney at Cotney Attorneys & Consultants, please call us today.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.