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Two Contract Clauses Every Subcontractor Should Look Out For

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Whenever a subcontractor is tasked with providing work to a construction project, they must be careful to ensure that their hard work isn’t going to end up costing them money in the end. This might seem counterintuitive or backwards, but it’s a grim reality in an industry funded by owners that value terms and conditions over subcontractors’ best interests. Unbeknownst to you, the contract you signed could lead to the demise of your business. This is why many contractors have their contracts reviewed by a Denver construction lawyer prior to making any legally binding decisions. 

Recognizing that a contract is flawed allows you to renegotiate the sections that could hurt your business. Best of all, the amount of money you can save in the long run by investing in construction contract review in Denver before a dispute has the chance to materialize can mean the difference between a lucrative opportunity and an absolute nightmare. In this brief article, we’ll introduce three high-risk clauses that subcontractors need to keep an eye on to avoid a potentially crippling financial situation stemming from a contractual dispute.

1. Broad-Form Indemnity

Indemnity is a hotly disputed concept found in many construction contracts across the nation. Basically, it determines liability while protecting the other party against harm (i.e., lawsuits, claims, etc.). Some states have established anti-indemnity laws to deter subcontractors from taking the blame for defects and errors they weren’t responsible for, but it’s still imperative that subcontractors understand the problems that arise when indemnity isn’t allocated fairly. This is especially true when discussing what is known as “broad-form indemnity.”

Broad-form indemnity requires the subcontractor to act as a buffer between claims and the general contractor. This means subcontractors are penalized even when the error can be clearly associated with actions taken by the general contractor. You don’t want to be forced to act like an insurance company on behalf of the general contractor, and our Denver construction lawyers can ensure that your contracts won’t subject your business to such treatment.

2. No Damages for Delay

Construction projects have a tendency to extend past deadlines due to project delays. When this happens, it can lead to additional costs for subcontractors, including additional labor costs and equipment rental fees. Direct costs such as these are only half of the story. Indirect costs, like lost profits from the inability to take on a new contract due to another project’s delays, could be worth even more. When a project is delayed for reasons outside of your control, you shouldn’t be expected to put in extra time and money to make up the difference. You should be compensated. When a clause asserts that there will be no damages assessed for any delays, subcontractors must consider whether or not this is a risk they are willing to take. Failing to invest in contract review in Denver could lead to you paying additional expenses to complete a project that has fallen far behind schedule.

If you would like to speak with one of our Denver construction 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.