Whether you represent a company that regularly builds and expands or you are developing real estate for the first time, understanding what goes into a good construction contract may protect your interests now and in the future. In fact, some experts believe disputes over construction contracts are among the top agreements that lead to litigation or otherwise seriously disrupt business interests.
A good contract will be thorough and clear
There are several ways ambiguous language in your contract, or missing vital elements, can compromise your agreement. Be sure your contract defines everything in specific terms, addresses building codes as they are in city documents and thoroughly lists obligations as all parties understand them.
It should also address time and cost
Everyone involved should have an understanding of the timeframe for the project, or projects, in question. A good contract will clearly provide the expected length for the construction and the ensuing costs for labor, materials and other needs.
Other important elements to include
Construction contracts should also address the payment methods as well as penalties and material terms. Additionally, your contract should address how you and the other party will approach dispute resolutions in the event of a breach or disagreement. Will you use arbitration? Mediation? Neither?
Taking time to address these issues now could save you and the other party time and money. That said, the extent of details in your construction contract will depend on the project itself as well as the needs of all involved parties.