Benefits of Construction Contracts
Construction projects are often huge undertakings. They can cost five, six, or even seven figures or more. Because there is so much money at risk, it’s a good idea to have a contract in place.
Construction contracts outline all the details of a project. These details may include tasks that need to be completed, payment schedules, deadlines, and materials to be used.
Contracts may seem like negative things and something to just cause more work for you, but when something goes wrong, you’ll wish you had a contract to protect you. Your contract should include various elements, such as the following:
- State-specific language. States have different construction laws. As such, they may require specific language to appear in signed contracts.
- This portion of the contract sets expectations for the financial portion of the job, such as the total price, draw schedule, and payment terms.
- Key dates. The date when construction will begin and when construction will be completed need to be included in your contract.
- List of documents. Your contract may include various documents, such as plans, proposals, and attachments. Make sure you and your clients are relying on the same documents so that there is no confusion.
- Insurance and bonds. You should list what types of insurance, bonds, and other coverage you have in case an accident or other issue happens while on the job.
Now that you know what to include in a contract, here’s a look at how they can help your business.
Contracts clearly outline the rights and responsibilities of the parties involved in a construction project. Payment is one major example of this. A construction contract can outline terms of payment, how to collect payment, and when it is due.
Contracts can help manage a construction project by setting out specific timelines and milestones for completion. By setting timelines, both parties have a better understanding of what needs to be completed and by when. This helps prevent delays and prevents any overspending or misuse of resources by the contractor.
Construction contracts are also beneficial for managing construction costs. These legal documents can provide clear guidelines for how money should be paid to all the parties involved, including the general contractor, subcontractors, vendors, and anyone else who needs to be paid. A contract can keep everything legit financially and reduce the risk of unexpected expenses.
Disputes arise in construction projects, so it’s important to ensure that your contract includes a dispute resolution clause. This clause should be a paragraph in the contract that specifies how disagreements should be resolved. General contractors should ensure that the dispute resolution clause protects their interests. Common dispute resolution methods include mediation, arbitration, and litigation.
Contact Us Today
Contracts are a must-have for every contractor. By having one in place, contractors can protect themselves legally and financially.
A poorly drafted, incomplete, or one-sided agreement can prove costly in many ways. The Florida construction lawyers at Linkhorst & Hockin, P.A. will help you avoid this issue. Fill out the online form or call 561-626-8880 to schedule a consultation.