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Before Signing a Construction Contract

On Behalf of | Feb 12, 2016 | Business Law, Real Estate Law |

Any solid construction contract will include certain elements: the price for the work, the scope of work, the terms and conditions of payment, etc. But sometimes the standard contractor’s contract is missing something. In a perfect world, the contract should also discuss foreseeable risks and how they would be handled between the two parties involved. Allocating a list of potential risks relating to the project will result in a longer contract, but it will also reduce the potential for disagreements and fumbling around in “gray areas” that no one discussed before the job started.

In many cases, the construction contract is actually formed through the bidding process. The property owner will submit a request for quote or proposal and contractors wishing to perform the scope of work described will respond with pricing and additional information. The bid from the contractor is a binding offer – when accepted it results in a legally enforceable contract. When a bid is accepted, it is often referred to as an “award” of the contract under discussion.

If you have a contractor’s contract that needs your signature in order to start work on the project, there are several things to think about before putting your pen to the paper.

1. Time Frame: Unless the entire transaction is already complete at the time you are signing the contract (which would be very strange), there needs to be a timeline indicating at one point in time future events related to the project will occur.
2. Pricing: All prices related to the job (material, shipping, delivery, labor, rental fees for equipment, etc.) should be clearly stated.
3. Payment Method and Due Date: Make sure the method of payment is amenable to both parties and that everyone is aware of the expected payment amounts and due dates throughout the project in order to avoid confusion later. It’s also important to be aware of any payment penalties.
4. Detailed Scope of Work: Make sure the details of the scope of work are included in the contract or that design plans are referenced specifically within the contracts. This will avoid confusion later when it’s called into question whether the surfaces were to be made of marble or have a marble finish.
5. Arbitration Clauses: In some cases, no matter how careful you are, a dispute will arise at a later date. In these cases, it is very helpful when there is already an arbitration clause included in the original contract. Know what it is and what the method of resolution would be if a dispute were to arise in the midst of the project.

If you are considering signing a contractor’s contract and you have questions or if you need legal assistance handing a dispute that isn’t specifically addressed in your original contract, please get in touch with the southern California real estate and business law attorneys at The Law Office of Retz & Aldover LLP.