Construction companies need to be very thorough when drafting contracts. Likewise, the businesses who enter into agreements with them need to pay close attention to what contracts cover and what they omit. Both parties need a fairly comprehensive understanding about what they are agreeing to in order to avoid unwelcome surprises.
Here are five of the most important terms that should be a part of every construction contract.
1. Scope of Work
Clients need to be clear about what a company is going to do for them. They may reasonably believe that certain items are part of an agreement for services when in fact they are not within the scope of work. One of the most important elements of a construction contract is what services a company is responsible for completing.
Being explicit about the scope of work is also imperative for insurance purposes. An insurer that has issued a bond, for example, has to know what it is insuring. An insurer that handles Augusta construction insurance providers can offer companies assistance with both general liability and project specific policies.
2. Payment Obligations
Usually, construction contracts do not call for payment in a lump sum. Instead they will have fixed amounts or percentage amounts due at various stages of the project. Contracts need to designate when clients have to make payments.
3. Insurance Information
Certain projects have insurance coverage requirements as a prerequisite to bidding. A contract must specify if companies must maintain certain levels of insurance coverage, and clients may wish to be named as an additional insured or interested party on certain types of policies. Companies that need to have coverage from a company that provides Augusta construction insurance can attach policy information to contracts as an exhibit.
4. Parties to the Agreement and Notice
It may seem obvious who a contract binds, but this is not always the case. Contracts absolutely must contain the name, contact information, and signature of all parties.
In construction contracts, a third-party such as an engineer or architect may also need to be named in a contract. Identifying who has involvement in a contract and their contact information is essential for providing adequate notice about certain matters in accordance with a contract’s terms.
5. Authority to Make Decisions
It may be unclear who has the capacity to make key decisions pertaining to a scope of work as well as who can approve work or sign off on change orders. A contract should stipulate which individuals working for both a construction company and the client have contractual authority.
Ultimately, some good preparation and organization will help construction companies draft inclusive and well-devised agreements. Contracts need methodical attention to detail, and they have to fully spell out each party’s role in the completion of work.
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Social Title: 5 Key Clauses to Include in Every Construction Contract
Social Description: Construction contracts should be very thorough so both parties know what one another expects. Here are five important