Writing a Construction Contract

Like many other types of contracts, a construction contract is a legally binding document that outlines a series of obligations and rights of the parties involved. While sometimes buying one such contract from a retailer may be speed up the process, the pre-drafted alternatives may not be such a great idea, since they mayn’t contain terms specific to the type of project your chosen home builder is hired for.

On the other hand, by personally creating a construction contract for one or more , you can include a lot of specific terms, including an insurance clause, a payment provision and other terms that apply to your project.


Identifying the scope of work

The contract you want to write for building needs to specifically define the amount and type of work the subcontractor or contractor needs to perform. The work needs to be detailed upon as much as possible, so that each party understand what needs to be done and how. For example, if you write a contract to build a house, then you need to state in the contractor the party who is responsible for completing the project and the fact that it needs to complete it in accordance to the project’s plans.


Consider writing an insurance provision

The reason writing a provision is so important is because it covers the various risks construction projects are exposed to, including mistakes in workmanship, property damage, personal injury and so forth. In the clause you need to clearly state which party working on the project needs to provide insurance if required and the party that needs to be named additional insured.

When it comes to the construction industry, no matter if you’re building yourself a small house or , the insurance coverage usually includes builder’s risk, professional liability, property insurance, general liability and of course, workers’ compensation.


Handling plan deviations

Under certain circumstances, deviations from the plan may occur and that is why you need to learn how to properly handle them. Even if in the contract the scope of work has already been defined, sometimes the contractor needs to perform additional work or the nature of the work may change. Because of that, you need to write a contract that stipulates the way such situations are dealt with.

For example, it could be that in your clause you wanted the subcontractor to refrain from doing additional work unless he receives a change order from the contractor. If the subcontractor doesn’t receive an order, then the additional work he does won’t be paid.


Write the payment provision

Last but not least, you need to clearly specify in the payment clause the time the project owner has in order to pay the contractor for his services after he received the invoice, but also when the retention can be held and the specific details of the time it can be released.

Don’t forget that you also need to include details in the clause concerning the circumstances under which the contractor or the owner have the right of withholding payment. By keeping these things in mind, writing a contract for your project is going to ensure everything will go according to plan.

What to Consider When Buying a Home

Sean Quartermaine

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