A well-drafted contract is essential to the success of any construction project. It dictates the terms for everything from materials used to payment schedules, and specifies contingency plans if things go wrong such as delays or disputes over work quality. The elements below are necessary for practically all construction contracts because they can result in significant vulnerabilities if left out.
Name, Address, and Signatures of all Parties
A legally binding contract must specify who is creating the agreement and contain their addresses (which can help identify jurisdiction) and signatures, the latter of which is an indication of consent.
Designation of Authority
Construction projects can be complex, which is why it is important to specify who has the authority to make certain legally binding decisions. Having this information in the contract makes it easier to obtain quick decisions when necessary and eliminates any delays or confusion when any unusual events or setbacks occur.
Scope of Work
This section explains, in detail, the services to be provided. It includes a project description, list of expected goals and targets, technical considerations, contractor and subcontractor responsibilities, a description of materials to be used, and other components that contribute to a successful completion of the project.
Cost and Payment Terms
There should be no ambiguity surrounding the cost of services (even those beyond the scope of the project): the contract should specify the total amount due, schedule of payments, and all terms and conditions of payment. This section should also indicate whether late penalties apply when the project owner does not pay on time.
Schedule of Work
A schedule of work contains the following mission-critical elements:
- – Notice to proceed date
- – Construction start date
- – Date of completion
There should be a clear differentiation between calendar days and work days. Contractors should account for any typical lead times from their suppliers and include the stipulation that they are not responsible if there are any delays due to bad weather or the property owner failing to get the required approvals, permits, and easements on time.
All construction contracts should specify how the parties will resolve problems or disputes. For example, some documents have arbitration clauses to avoid the time and expense of a lawsuit. Whatever method is selected should be equally accessible to both sides.
Lien Law Notice
Many states require certain construction contracts to have a lien law notice. This section confirms that if the contractor fails to pay their subcontractors or suppliers, those parties are legally able to file a lien on the property. A lien can prevent the owner from selling or otherwise transferring ownership of the project until it is satisfied.
To ensure that your contracts protect your interests while remaining fair to all involved, contact an experienced construction law attorney to review or draw up these agreements. At Rosen Law LLC we are committed to providing quality counsel for all your needs and challenges in the New York and Florida construction environments, so if you require assistance, please call (516) 437-3400 today.