In today's business world, litigation is fairly common. That's why it's become just as common for businesses to proactively protect themselves against legal issues. Sadly, this practice is particularly rampant in the construction, building and real estate industries. When litigation ensues in connection to a property development project, the outcome is often determined based on project contracts.
Therefore, you can easily say that project contracts affect everyone from the owner to the designer to the contractor to the subcontractor to the suppliers. Yet, too often contracts frequently include boilerplate fine print, onerous, insufficiently defined terms and overlooked conditions. Or, even worse, there is no written contract in place at all. Considering that the contract can make or break a case, it is vital to give consideration to basic elements of the agreement and to put everything in writing.
If at all possible, include terms and conditions in the written agreement in order to create an advantageous position in the event of legal complications or litigation in connection to the project. Obviously, price and schedule should be addressed in detail in the written contract for the project. But there are other, more commonly overlooked elements that need to be addressed in writing as well. They can play a major role in a number of construction disputes.
Scope of Work: A clear description of the exact work each party will be expected to perform in connection to the project is vital. Using a standardized form for your written contract can mean little to no detail in this area. Without clearly defined scope of work pertaining to each subcontractor involved, you have very little to refer to if a dispute arises.
Indemnity: Never overlook or worse, ignore, a specified indemnity. They can have significant and long-lasting implications for a project. The effects can even rain down on your project long after it is completed. Indemnity provisions allocate risks and determine who pays whom. Indemnity clauses are typically triggered by negligence or fault in the course of work on the project.
Dispute Resolution: Portions of good contracts are dedicated to addressing how disputes will be resolved if and when problems arise: litigated in court before judge and jury, private arbitration, mediation, etc.
For information on other commonly overlooked, but crucial, elements of a contract to protect your business and your land development projects from costly legal problems, please contact an experienced business and real estate attorney at The Law Office of Retz & Aldover LLP.