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8 Ways to Create a Strong Construction Contract

An effective construction contract can help protect your company against legal problems if a relationship with a business partner goes awry. Having an enforceable contract with clearly outlined expectations can only benefit all parties. In this editorial, a Greensboro construction lawyer will give you some tips on how to create a strong construction contract.

1) Outline a Realistic Timeframe

First, it’s important to outline a realistic timeframe for project completion. This should account for the estimated project timeline, time for supplies and materials to arrive, and any possible setbacks. If your construction project takes longer than you promised your client, you could be held responsible for a breach of contract. For this reason, it is better to set a slightly later deadline and deliver the project earlier than to be late.

2) Ensure the Contract Does Not Violate Any Laws

Unless you are a legal professional, you may not know all the laws that govern construction law in your state. Even if you begin to draft a contract, you should hire a Greensboro contractor attorney to review it before you send it over to an owner, subcontractor, supplier, or other vendor to sign. Without an attorney, you run the risk of having a contract violate laws you may not be aware of. Having a lawyer to verify the legality of documents can ensure that you have all the clauses you need in the contract and protect your company. 

3) Hire a Greensboro Construction Lawyer to Review It

There are three times when you should hire a construction lawyer to review a contract: before you send it to be signed, after you receive a counter signature to ensure it is valid, and when you need to enforce the contract in a court of law. Having an attorney who is knowledgeable about your business and its contracts can be beneficial if the other party does not uphold the terms of the contract.

4) Charge the Right Price

It is critical to request the right amount of money for work during the initial phases of the project. If your company provides a quote for work that is to be completed, it needs to be as accurate as possible. This means verifying material costs, subcontractor labor costs, permit costs, equipment prices (buying leasing, renting), and other fees. If you discover later that labor or materials will cost you more than you quoted in the contract, your company will have to absorb the added costs. To prevent a possible breach in contract and avoid working on a project that ends up hurting your business, be as accurate as possible in the price that you quote.

5) Perform a Risk Assessment

When creating a contract, think about what a project’s biggest vulnerabilities could be. For instance, a subcontractor could try to poach a client that they learn about over the course of working with your company. Part of the contract should feature a noncompete clause. Although this clause may not be necessary for a contract with certain entities, such as a supplier, each contract should address unique project risks and not serve as a one-size-fits-all document.

6) Be Clear About the Scope of Work

Be clear about the scope of work. Without this featured in your contract, your client could claim that your company did not fulfill the project requirements. With subcontractors and other vendors, it’s important to specify the rates to be paid for materials and services in writing. The more clear you are in the contract, the easier it will be to enforce. Plus, your clients will have a realistic idea of what to expect.

7) Provide Payment Terms

Payment terms should be outlined in your contract. This includes the total cost of the project as well as payment in regard to any project milestones. If your company requires a certain amount of payment upfront or in installments over the course of the project, it should be addressed in the contract. If your client does not compensate you, or if a vendor fails to provide the materials purchased, the contract should outline how a payment dispute will be resolved.

8) Detail Dispute Processes

In any contract, you should detail what will happen in the event that a dispute occurs. In many cases involving long-term partnerships, mediation is the recommended step. Going to court will cost both parties a lot more than mediation or settling out of court. Discuss the best type of dispute process with a Greensboro construction law firm to ensure that it is outlined clearly in your contract.

If you have any questions about how to create a strong legal contract, you can schedule an appointment with our Greensboro construction law lawyers. They can work with your construction company to ensure that every contract you sign is enforceable to the highest extent of the law. You never know when you will need it.

If you would like to speak with a Greensboro construction attorney, please contact 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.