Contracts for Construction – Getting Your Forms in Shape
Good contract forms are a must for every business. In the construction business, a well-written agreement with carefully prepared provisions can be a huge advantage whenever a dispute arises; these provisions can spell the difference between a prompt and favorable result, or a drawn out and costly legal battle. These benefits are priceless since they allow the business to concentrate on the project, without the worry and expense of litigation. As experienced Construction Law Attorneys, we can help you get your forms in shape. Call (760) 747-2202 to schedule your free consultation.
The Owner Contract. Contracts between a general contractor and the owner should contain important protections for the contractor, including:
- Scope of work. A carefully defined scope of work with reference to updated drawings. There is no more important aspect of the owner contract than a clear description of the project, and the scope of work.
- Budget. Is the budget clearly stated? Does the budget match up with the scope of work?
- Proof of funding. When an owner lacks adequate funding for the project, disputes and frustration are highly probable. Proof of funding, including the name and address of the construction lender, is critical.
- Completion date. A carefully prepared schedule with ample time for completion of the project is essential.
- Delay provision. An owner contract without a delay damages provision for late completion can create huge risks for the contractor. The solution is a carefully drafted and negotiated delay damages provision that puts a cap on delay damages and allows extensions of time for delays outside of the contractor’s control.
- Payment. Good payment applications are crucial. Do the applications track the budget? The contract should describe the form and the process for review and approval of the applications, and for payment on a regular basis.
The Subcontract. A good subcontract form should protect the general contractor with provisions like these:
- Failure to perform. One of the most common disputes in construction is a failure to perform by a subcontractor. If a general contractor has a good subcontract form, powerful remedies will be available such as rapid termination of services, back-charging for the cost of completing the work, reimbursement/indemnity, and mandatory mediation/arbitration.
- Failed work. If a dispute involves failed work, some of the remedies available under a good contract form include: rapid correction requirements, termination of services, back charging, Insurance certificates for the General contractor and owner, indemnity, and mandatory mediation/arbitration.
- Insurance covering both the general contractor and the owner is essential. Careful attention to proper insurance is essential. Does the subcontract require the needed coverages and prudent policy limits?
- Integration with the Owner Contract. The subcontract should incorporate the schedule, drawings, and insurance provisions of the Owner Contract.
Other Contracts. Other contracts that should be carefully reviewed include indemnity agreements between lenders and general contractors and owner contracts with specialty contractors. These contracts should be carefully reviewed to ensure adequate protection for the contractor.
Getting Your Forms in Shape. Our attorneys have more than 30 years of experience handling construction disputes, representing general contractors, subcontractors, design professionals and material suppliers. Our attorneys can help review your forms and spot potential weaknesses. When necessary, we can help reach rapid resolution of late payment, substandard work, failure to perform, delayed completion, and other types of construction disputes.