Many contractors are taking on roles related to design in their own projects. Unfortunately, these construction professionals often sign contracts that heavily favor the client. It’s important to read any contract thoroughly before signing and add any clauses in negotiation to protect yourself. Ultimately, well-written contracts benefit both you and your client, keeping misunderstandings to a minimum and business relationships strong.
In part one of this two-part article, a Portland construction attorney explains important contract provisions and clauses you need to be aware of.
It’s vital to clearly define your payment terms. The better defined they are, the more likely you’ll be paid on time and avoid any disagreements. This should include penalties for late payment and your recourse in the event your client doesn’t pay. Carefully screen your contracts for language that would allow your client to delay or withhold payment. If you find yourself in a situation where payment is being withheld, your next step should be to contact a Portland construction lawyer.
Limitation of Liability
If you don’t limit your liability on projects, eventually a project risk could cause considerable financial losses for your business. Including a maximum liability clause establishes limits to the responsibility you’ll except for a client’s claim. A client is more likely to agree to your limitation of liability clause if you use a meaningful limit that you adjust per project. The amount should relate to the project fees and potential damages.
Any contract without a limitation of liability puts unnecessary risks on you and should be considered carefully before signing. Although, some parties, such as public entities, very seldom agree to a limitation of liability clause.
In a contract, scope lays out your services in detail. Clearly detailing what you will do for the client and defining any limits prevents the client from trying to eke more work out of you without paying for it. Beware of language that describes your scope as “adequate professional services necessary to complete the project,” it may lead to extra work that you didn’t intend to include. Not including a strong scope could mean you’re making seemingly endless changes to the plans your client asked for, which is not only frustrating but costly.
Read part two of this article, which details other provisions to review or add to your contracts.
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.