Building & Construction Contracts: What You Should Look Out For!

Builders, contractors, and individuals need to have the correct building and construction contract in place when they are building a new property or renovating an existing property.

This is critical in ensuring that everyone is informed of their rights and obligations during the construction process.

Here are some key features you should look out for in a building and construction contract.

Written Building & Construction Contracts

Whilst it is not a requirement that all construction contracts be in writing, it will be extremely beneficial to have a written agreement, especially in the event of a dispute.

When a written contract is in place, the terms are carefully and clearly defined, as well as each party’s expectations, rights, and obligations.

In contrast, the terms of an oral agreement or contract are defined by the parties’ discussions or negotiation correspondence.

In the event a dispute were to arise, likely, the parties will not agree on what was negotiated or remember the initial agreement.

Such disagreements or selective memory will almost always increase the costs of litigation.

Party’s Performance of the Contract

A construction contract or agreement must provide a clear plan of the project and how the parties will continue to carry out the construction work to ensure the project runs efficiently.

If a party’s performance is not clear, it can lead to serious issues, particularly where each party has an assumption about their performance under the agreement.

Further, time frames should also be included in the contract.

The contract or agreement should provide clauses that deal with events such as delays and the procedure surrounding how the parties are to deal with the delay(s).

Payment

Not only should the total contract price be included in the construction contract or agreement, but also how and when payment should be made.

Generally, construction contracts will include a fixed price lump sum where the cost of the work is fixed, although the costs of some elements may be varied.

However, there are various types of construction contracts.

The contract must include a payment schedule and listing dates for when payments are required to be made by one party.

This is to ensure that all parties’ obligations are clearly expressed.

This also prevents the likelihood of parties forgetting particular dates and payments.

The contract or agreement should also include provisions setting out the procedure of extending the payment schedule in particular circumstances, such as a delay in the project.

Termination of Building & Construction Contracts

A termination clause must be included in a construction contract or agreement.

This clause should detail the situations where each party can terminate the contract and discontinue their obligations under the contract.

Contact Us

For more information about building and construction contracts, contact us at Bambrick Legal today. We offer a free, no-obligation 15-min consultation for all enquiries.