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Construction Contracts: Tips for Avoiding Trouble

| Feb 16, 2016 | Business Law, Real Estate Law |

There are a lot of things that can go wrong with any project, but most are addressed with a thorough contract. Having said that, there are also a lot of things that can go wrong with any contract, but most arise from one single fault during the creation process: ambiguity. There is nothing a construction contract can be that is worse than ambiguous. Yet it sometimes occurs – most often when numerous documents are combined to form the contract for the project (i.e. general conditions, principal agreement, supplementary conditions, specifications, drawings, change orders, etc.) Rushing to finalize contracts can end up resulting in conflicts between statements being overlooked and other unintended consequences.

If you want to avoid ambiguity in your construction contract, start here.

Keep things simple.
Writing in the contract should be simple and clear. Don’t use unnecessary wording – keep things concise. A construction contract will be read by any number of people. It should be so clear that it is difficult to misinterpret. Please don’t forget to consider the fact that some of the people who may end up needing to read and interpret the construction contract will not have knowledge of the construction industry. Use plain English, avoid industry specific abbreviations, use short sentences, and avoid legalese and redundancy.

Include all parts of the agreement in the written contract.
When a contract is presented to the court as a result of a dispute and it appears complete and comprehensive, the court can prohibit the use of supportive documents even if one or both parties believe they provide meaning for the parties’ intentions or provide documentation of additional “agreements” outside of the contract. That means that any pre-bid meeting discussions that result in an agreement should actually be listed in the contract. Key reference documents used for the job should also be included.

Key definitions should be included.
If the court ends up with your contract in their hands, they will assign terms with their “ordinary” meanings when interpreting the document. If you need the words to be interpreted using industry specific definitions, these definitions should be included in the contract.

If you keep the above in mind when you are considering your next construction contract, you should find it easier to avoid trouble by skipping past some of the most common pitfalls. For legal assistance with your next construction contract, please get in touch with one of the experienced southern California real estate and business attorneys at The Law Office of Retz & Aldover LLP.