Best Practices for Construction Contracts Part 2
When you are in the initial stages of preparing for a construction project, the one thing that you do not want to get wrong is the contract. Not having a well-written contract with clauses that can protect your interest can costs you thousands of dollars. It’s critical to have a clear and concise contract that’s amenable to both parties but protects you should conflicts arise. That’s why it’s always a great idea to contact a Miami contractor attorney who’s well-versed in the nuances of contracts to help you with it.
In part one of our series on best practices for construction contracts, we provided tips for how the contract should be written to provide a concise, easy-to-understand guide for all parties. In the second part of our series, we will look at a number of clauses that you should include to protect your interests.
Pay If Paid Clause
A pay if paid clause in a contract makes the contractor’s obligation to pay a subcontractor contingent on receiving payment from a property owner or developer. Contractors are often caught in the middle between an owner who they expect to pay promptly and subcontractors who need to be compensated. This shifts the financial risk away from the contractor and ensures that they are only paying a subcontractor for a project when funds are received.
Delays happen in construction. One of the best ways to protect your interests in the event of a delay is with a notice clause. A notice clause in a contract sets the parameters for how contractors may notify owners of project delays. It will determine what is an “adequate” amount of time for giving the notice and whether the substance of it is justifiable. This will make a big difference if you are seeking financial compensation for a delay claim.
Dispute Resolution Clause
Conflicts also happen in construction. It’s best to confront it at the beginning of the contract by including a dispute resolution clause that states how disputes will be handled, if they arise. These clauses will state if alternative dispute resolution (ADR) is an option, what types of ADR will be used, and the timeframe before litigation may commence, among other items.
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.