Construction law deals with all aspects of building, from the initial bidding process, to the negotiation and drafting of contracts. Construction law is also relied upon when there are disputes between the parties.
Commonly, an owner procures offers from contractors through a Request for Proposal (RFP) or a Request for Qualifications (RFQ). An owner usually publishes the RFP or RFQ during the design phase of the project, and includes specifications of what the owner wants. After the owner selects the contractor, the contractor will advise on pre-construction matters during the design phase.
At some predetermined time, such as at the end of the design phase, the contractor offers a contract price for the construction of the project. After negotiations, the owner and contractor may agree on the price, and the contractor continues construction. If the owner and contractor do not agree on the price, the owner will often negotiated with other contractors.
Occasionally, contractors and owners use form contracts for their agreement to construct a project in exchange for payment. Whether the contractor and owner negotiate and draft their own contract or use a form contract, the following clauses often appear in the construction contract:
- Changed Conditions Clause – The changed conditions clause shifts the risk of loss or delay from the contractor to the owner when the contractor encounters unforeseen conditions.
- Termination for Convenience Clause – If the project becomes extremely difficult, dangerous or expensive, the owner can stop the project and rescind the construction contract without being liable for damages under the termination for convenience clause.
- Site Investigation Clause – Under the site investigation clause, the contractor is required to investigate the site, in order to prevent the contractor from arguing that the conditions of the site were different than what the contractor expected.
Although the contract may not state so, the law implies duties between the contractor and owner when they enter into a construction agreement:
- Contractor’s Duty – Courts have held that the contractor owes the owner a duty to perform services in an appropriate workmanlike manner. This duty requires the contractor to warn the owner if the design or construction specifications may have damaging results.
- Owner’s Duty – Courts have also held that an owner has a duty to cooperate with contractors. The owner’s duty to cooperate also requires that the owner not interfere with or purposefully delay the contractor’s performance.
Essentially, both the owner and the contractor are required by law to act in good faith in the performance of their contractual obligations.
Construction contract negotiations can be tolling and difficult. An attorney can assist you with negotiations so your needs and requirements will be met. A real estate lawyer can also help you with drafting construction contracts, and explain your duties under the contract. Additionally, if one party suggests alterations to the contract, an attorney can help you negotiate for your best interest or pursue the appropriate legal remedy.