Know Your Construction Contracts
Construction contracts though are related to construction work only, in essence are not different from normal contract, as the responsibilities and rights of both (or multiple) parties involved in the whole deal. Signing a contract is not a mere formality rather it is a legal requirement, first of all. Secondly, if all the" ifs" and "buts" are mentioned within the contract clauses, then there is little or no room left for dispute to occur in the future. So in this way for all the parties, signing a construction contract is beneficial.
Not trying to get too legal with the terms, but a construction contract is nothing but an agreement between two or more stakeholders involved. For simplicity, we are taking the example of contract between two parties only. One party agrees to do the construction work whereas other party's job is pay for the job as per the payment terms decided. Scope definition as to what work comes under the contract and what is not.
Terms that are illegal in their nature cannot be part of a legal construction contract. For instance, if a party signs a contract to construct a building on a land that is not legally theirs, then that contract is not legal and no party can be sued for its violation in the court of law. Any party involved in breaching any clause of the contract is supposed to compensate the other party as per the clauses mentioned in the contract, or can be taken to court for compensation (that may involve legal expenditures as well).
A well written contract requires the legal help and ideally it should contain the roles & responsibilities of each party involved, work details, scope of the project, pricing, pricing schedule, out of pocket expenses, start date (or period) of the project, end date (or period) of the project, change request procedure, conflict resolutions, penalties. It is very important to put everything in black and white to avoid future conflicts in each of the areas mentioned above.
Deciding what needs to be done important, but what is not to be done is even more important. A good contract puts down every details, as most of the times misunderstandings occurs between the parties as one party claims that something is 'obvious', like when you said we will build the doors, we assumed door locks would be part of it. These kinds of issues can easily be avoided in a professionally written contract. Similarly, the contract must have clauses for genuine exceptional scenarios that can cause delay in the completion of the project.
It is also essential to mention the exit clauses in the contact so that both the parties can go out of the contract legally. The ideal way for contract termination is the timely completion of the project. Other than that a breach in the contract also terminates the projects. In some cases both parties can also decided mutually to terminate the project, if situations demand them to do so.