contract_claimsIt’s important to put in due diligence when agreeing to and signing construction contracts. Here are some important tips to follow.

Before You Contract

  • Check to make sure that you have the correct licenses. Without the correct licenses, it’s incredibly difficult to get anything started
  • Check the licenses of your contractor. Make note of any anomalies, including suspended licenses, having no license or a multitude of complaints.
  • Research the owner – look for liens and judgments or lawsuits.

Get the Contract in Writing

  • The written agreement should contain all relevant and important information on terms. Make sure that the things you’ve spoken about are in writing.
  • At the very least, the contract should include who is doing what, what exactly they will be doing, when they will begin and when you expect them to be finished, where it will be done, how it will be done, and prices.
  • Both parties should sign the agreement

Assessing the Contract

  • Carefully read the whole contract. Keep an eye out for handwritten changes and don’t ignore them. 
  • Read all relevant addenda and contract documents
  • Be careful of subcontracting clauses in the contract. Just as you’ve assessed the general contractor, you may want to do so with the subcontractors.
    • Make note of ‘flow-down’ or ‘pass through’ clauses in the contract, which gives the subcontractor all the same responsibilities to the contract as the general contractor. 
    • Other important clauses can include dispute resolution, termination for convenience or time is of the essence. 
  • Make sure that all party names are correct.
    • If the party is a corporation, LLC, etc., make sure to use the full legal name of the entity in the contract. This can help to alleviate any legal troubles later on if it should come to that. 
    • If there are endorsements, make sure they include a document stating their capacity to endorse the contract on behalf of the entity.
  • Note any documents or information that you are required to give the other party and take note of any deadlines and notice periods.
    • Make separate lists of these and keep them in a place easily accessible and visible to the project managers involved. This give you the power to enforce your deadlines in a non-confrontational manner. 
  • Remember that there can always be changes to the language in the contract.If you have a little bargaining power, you may be able to negotiate some changes in the contract.

If you have any further questions or concerns, contact a local and knowledgeable construction lawyer. Consider asking them to review your contract, especially for large projects.