Things to Consider Before Signing a Construction Contract

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What Is a Construction Contract?

A construction contract is a well-drafted agreement that clearly defines the work to be done, prices to be paid, and various terms and conditions for a construction project. It may also address other factors, such as the risks involved in the venture. 

Construction contracts often rely heavily on the bidding process. Construction contractors will submit their bid, which will be incorporated into the contract if their price is selected.

What Are Some Things to Consider before Signing a Construction Contract?

First off, make sure that all parties read and understand the contract. This especially applies to the party drafting the contract. If you notice any discrepancies between the writing and any oral agreements you had, they should be addressed before anything is signed.

Here are some things to consider before finalizing a construction contract:

What If the Parties Cannot Reach an Agreement?

Sometimes a construction project needs to be started immediately. A common example of where a project needs to be started sooner rather than later is where the project will be needed as a venue for an event in the future. Thus, parties may still need to proceed with work, but should strongly consider creating an “interim agreement.” This is an agreement that is not enforceable as a permanent agreement, but only for a specified amount of time. 

An interim agreement can be created by adding language to the contract stating, “This agreement is in effect only until a permanent agreement is negotiated by all parties.”  That way, the work can proceed on schedule, and the contract can be finalized at a later time.

Do I Need a Lawyer?

It is always a good idea to have a lawyer present when you sign the contract. They will be available to review the document for any errors or unauthorized changes. You may also wish to hire an attorney early on in the process so that they can help you draft a proper contract. Construction contract laws vary by state, so a lawyer might be needed for interpreting your state’s laws.  

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Last Modified: 09-26-2014 10:33 AM PDT

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