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5 elements to include in a construction contract

Given the scope of issues that can come up over the course of a construction project, you need to develop a strong construction contract to help minimize your liabilities.

There are five key components you need to address in each construction contract as a protection against legal trouble.

1. Scope of the project

The phrase “scope of work” is often too generic when referring to the expectations of the work performed. Clearly outline the services provided in the contract, as well as a description of materials, design plan, deadline, budget and other key details.

2. Total cost and payment requirements

Be clear to spell out the payment terms for the project. Make the cost of the services and materials clear, as well as the exact schedule for payment. List out the terms and conditions of non-payment, late payment and other issues.

3. Project timeline

A contractor should determine a feasible time frame for the project and include this schedule of work in the contract. It is always beneficial to include provisions for delays that are beyond human control, such as extreme weather or permitting issues.

4. Lien law protection

When people fail to uphold their end of the contract, you could find yourself responsible for their debts or damages. Lien law protection includes clauses in a contract that keep those financial or damage liabilities from moving to you.

5. Dispute resolution

Conflict is always possible when multiple parties are working together. It is helpful to have clauses in a contract that deals with breach of contracts or other disputes.

Contract errors or flaws could mean legal trouble. Carefully read through the contract before signing.