From time to time, I have someone guest post here on the Construction Law Monitor, giving our readers a fresh perspective on construction law topics. Today, Emma Martin has contributed a post that I think is really great. She is a writer for CB Structures, a family owned construction and engineering company that specializes in garage builders and pole building design. What’s great about her post is that it discusses a very legal topic – construction contracts – from the perspective of someone in the business. Enjoy her insights, and to learn more about construction contracts, read from this category on our blog: Construction Contracts.
A contract is an extremely important document for anyone who undertakes the type of business partnership necessary to get a construction project off the ground. But why is a contract necessary? For one thing, it lets everyone involved know exactly what is expected from all parties. For example, you will likely talk through an agreement pertaining to the price for labor as well as set deadlines for certain aspects of construction to be complete. Putting it down in writing ensures that everyone is on the same page and that all are protected. Should your contractor fail to deliver agreed-upon services, you have a legally binding document to bring into court as a security of recourse. In addition, your contractor has the same should you fail to pay. In short, contracts are a must. So how do you go about getting one?
1. Get professional help. The easiest way to get a contract is to hire a lawyer to write it up. There are law firms that specialize in contract law and they can take your information and draft a document that is tailored to your specific needs. This can be pricy, but the upside is that any loopholes that lose you money are on their head, and you can always sue them for recompense should your contract fail to hold up in court. It’s like doubling your insurance.
2. Start simple. If you’ve never written a contract before, you are going to need some help to ensure that it’s done right. Most people hire a law firm or other experienced contract writer to take care of this for them, but if you’re determined to go it alone (or you simply don’t have the extra cash to hire help), then at least search online for a template to get you started. It will include the general legal text required to make your contract binding, although you will have to fill in the details. Just be aware that you get what you pay for.
3. Pen the particulars. Two things that must be included in your contract are dates and payment amounts. You need deadlines in place to ensure that your project is done in a timely manner. Of course, you’ll have to keep in mind that any changes you make will affect deadlines, but assuming that everything remains the same, you should be able to count on your contractors to deliver what they promise (and a contract ensures that they will, or they will pay for it). In addition, you will likely want to hold payment until certain milestones have been met. For example, you are expected to pay a certain amount up front (25-50%, for example) as a retainer, as well as providing funds for all materials. But you don’t want to pay in full until the job is complete, so be sure to detail your payment schedule in the contract.
4. Sign on the dotted line. Once both parties have agreed upon all items in the contract, it needs to be signed to go into effect. This should be done with a notary (or legal representation) present to witness and two copies should be signed so that each party can retain an original.
5. Make changes. Unfortunately, changes are likely to occur even after the agreement has been finalized. Bad weather, late arrival of materials, or other unavoidable road blocks are common in construction. This, along with any change of plans on your part, could set back the schedule. So just be aware that a little flexibility will likely be required and you will need to fill out a change order to add on to the original contract so that you are covered in case of a legal dispute.