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Construction Contract

What is Construction Contract?

A construction contract is between a client that is seeking to build or remodel a new structure and a general contractor. The agreement will detail the general contractor’s scope of work including, payment, and rights to subcontract any of the tasks involved in completing the construction. All details of the work should be included in the contractor’s agreement. If there are any work orders or plans they should be attached in addition to any permits acquired from the local government to begin work.



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What are included in a Construction Contract?

The basic construction contract will typically identify/include the following parts: - Owner - Who is hiring the contractor. - General Contractor - Individual or construction company that is responsible for the oversight of the construction. - License Number - The general contractor’s state license number. - Work site - Where the construction is to be completed. - Project Description - A detailed description of the work and construction to be completed by the contractor.  This can also include - - project plans and specifications. - Contract Price - The total price to be paid for the project. - Payment Basis - When and how the payments will be made.  Terms for final payment. This will also define any penalty and interest for late payments. - Construction Schedule - The dates that the construction will begin and when the construction will be substantially completed by.  - - This will also detail how the project schedule will be divided. - Contract Document List - Any drawings, blueprints, exhibits, or other documents that are part of the contract. - Construction Scope - A description of all construction activities that will be part of the project. - Conditions & Responsibilities - Details responsibilities for the owner and contractor, including who is responsible for providing -certain documents and information. - Contract Laws - Details the governing laws, lien requirements, claims procedures, arbitration procedures, insurance, and liquidated damages. - A construction contract may also include details about: indemnification, dispute resolution, termination, inspection, insurance, liquidated damages, and force majeure or “Acts of God.”


Why is important?

A construction contract is necessary if you are building, renovating, or altering a building or structure.  A construction agreement protects both parties. If you have just decided to build your dream home, a construction contract will protect your interests in case of unreasonable construction delays and material shortages or your contractor surprises you with unexpected high costs.  If you’re a contractor, the construction contract will act as your guide to handling any unexpected issues before construction is complete. The construction contract allows each party to detail the exact work to be performed and the responsibilities of each party during the course of the project.  The construction contract also specifies the payment terms of the contract. All contract terms must comply with applicable laws.

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