In the construction industry, project success ultimately hinges on the contract binding the contractor and owner to a clear set of terms and conditions. This contract is central to each party’s success, but it’s not the only contract being signed before a project breaks ground. Subcontractors must be just as diligent as contractors when signing contracts, if not more so. In the past, subcontractors have been stiffed by contractors who claim that a verbal contract is sufficient for doing business. In other cases, contractors have insisted that a contract is standard fare and doesn’t require a close analysis. Take it from us, the Nashville construction lawyers at Cotney Construction Law, every contract you plan on signing must be reviewed first.
Our Nashville construction lawyers can review contracts to identify important clauses that could have a significant effect on subcontractors. Signing contracts without reviewing them first could result in significant logistical and financial challenges for your business, including discrepancies with scope of work, loss of lien rights, and limited dispute resolution options. In this three-part series, we will discuss a wide array of contractual clauses that can lead an unassuming subcontractor down the road to calamity.
Scope of Work
Scope of work is one of the most important clauses to review before signing a construction contract. This clause should be clearly detailed to eliminate any doubt about the work that is expected to be completed. Oftentimes, scope of work disputes boil down to a contractor claiming that more work falls under the established scope of work than the subcontractor anticipated, and the subcontractor claiming that the clause wasn’t specific enough to make a fair determination.
Another problematic quality of scope of work is that disputes rarely come to a head in the early stages of a project when parties have a minimally vested interest. These issues tend to occur towards the tail end of a project when subcontractors have already committed significant resources to the project and want to see it through to the end. Unfortunately, working outside the scope of work can quickly eat away at a subcontractor’s bottom line. It’s a lose-lose situation that can be remedied with preventative action. Consult a Nashville construction attorney to ensure that your scope of work clause is clearly stated, not up to interpretation.
Like most things in life, construction projects are vulnerable to change; and more often than not, these changes come at the least opportune time. Change orders are nothing new in the construction industry, and subcontractors are forced to deal with them all the time. There’s a good chance that the contractor you’re working under will maneuver a change order clause into your contract stating that any necessary changes or extra work required will be furnished as needed for successful project completion. Of course, the contract should also stipulate that the work required to implement any changes is compensated fairly. Subcontractors should get all change orders in writing, confirm the change order with a verbal follow-up, and apply the change order exactly as worded. Never assume that you’ll be paid for going above and beyond the call of duty. Working without first receiving a valid change order is a recipe for disaster.
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.