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Practical Contract Negotiation Advice for Construction Contractors

As Charlotte construction law lawyers, we know that contract negotiations can be challenging. While it is true that construction contracts can be intimidating, properly negotiating a contract can save you from succumbing to a project that has an unreasonable deadline, a low budget, or requirements that you cannot fulfill. Negotiating a contract requires creativity and compromise from both parties.

In this short article, we will provide you with some practical contract negotiation tips to help you get your next project started on the right foot.

Clearly Define Everything

It is your responsibility to ensure that you read and agree to all contract terms and conditions. This means having a clear understanding of the project owner’s performance requirements, and all of the project’s details, deliverables, and deadlines. If you do not understand something, do not sign the contract. Address any discrepancies and consult with one of our experienced Charlotte construction law attorneys to ensure the contract meets your expectations.

Focus on What Matters Most

When negotiating your next contract, it is important to focus on what matters—the bottom line. Focus on elements that will impact the project budget, timelines, payment and your job performance. Without a trained eye reviewing your contract, you could end up with vague payment terms, which can lead to conflict down the line. Be clear on payment terms with the owner and any subcontractors by negotiating provisions such as “pay when paid” and “pay if paid” to determine how risk will be shifted.

Consider Disputes Upfront

Every construction project has the potential for a dispute. How will you handle construction delays? Will you pursue arbitration or file a lawsuit? Specifying how a dispute will be handled and drafting a dispute clause with the appropriate language into your contract is a must during negotiations.

Discuss Critical Provisions

A successful negotiation involves working out critical details, especially the ones that expose you to more risk. Balancing risk among parties is key. Be sure that you address clauses such as scope, price, start date, payment terms, and end dates in every contract. Know what you will and will not be doing, whether the contract will be cost plus or fixed sum, and if change orders will be allowed.

Know When to Walk Away

If you and the other party cannot come to a mutually beneficial agreement or there are red flags that would present more disadvantages than the job is worth, it may be best to walk away from the project. Never force a project or you could find yourself entrenched in avoidable battles down the road.

If you are interested in speaking with one of our Charlotte construction law attorneys, 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.