Poorly written construction contracts can create legal issues in several ways. Establishing dispute resolution procedures, payment terms and change order guidelines to reduce disputes or legal actions against construction projects can reduce their likelihood.
Construction contracts should include clearly articulated building plans to avoid costly errors. Complications may arise if a builder misinterprets what the property owner or architect intended from their interpretation.
Scope of Work
An accurate scope of work helps construction project participants avoid miscommunication and disputes by setting forth what should be delivered, paid for and when. Furthermore, any other contract terms which might apply should also be detailed within it.
An effective scope of work should be written in plain language for easy comprehension by all involved in the project. Abbreviations and construction industry jargon should be avoided to avoid confusion, while providing comprehensive coverage can help avoid disputes, save time, and increase chances of a successful project outcome.
Scope of Work documents must be detailed, providing details about a contractor’s responsibilities as well as any unique requirements or specifications that apply. They should also outline details regarding start and end dates as well as any outside plans the contractor relies upon for completion of the project; visual aids like Gantt charts may help create clarity around this document.
Payments
Construction contracts should clearly specify payment terms and methods, as well as penalties or legal enforcement mechanisms in case of nonpayment.
Payment disputes in the construction industry are all too familiar, often leading to substantial financial strain for contractors and suppliers. Carefully reviewing all agreements, adhering to them strictly, documenting any changes, and documenting any resulting payment-related issues can help minimize payment-related problems. Taking note of state retainage laws (which provide maximum charges and timelines for releasing retained funds) as well as their effect on subcontractor bond and lien rights can further help avoid payment-related problems.
Construction projects can be unpredictable, leading to disputes among parties involved despite comprehensive contracts. Implementing proper dispute resolution procedures may help keep these conflicts from escalating into costly legal battles or delays – mediation, arbitration and litigation are among several methods available for addressing them.
Indemnification
Construction contract disputes can be commonplace; however, they can often be avoided with clear project descriptions, quality requirements and dispute resolution processes such as arbitration, mediation or litigation.
An indemnification clause in a building contract that requires one party to assume liability for losses suffered is known as indemnification, one of the most frequently negotiated and litigated provisions within these contracts.
As long as indemnity clauses don’t violate state liability laws, indemnity clauses tend to be legally enforceable. Some states don’t favor limits to contractor liability as they believe contractors owe property owners a duty of care – in such instances these clauses may be rejected although some exceptions can be accepted with restrictions attached.
Due to these risks, contractors should carefully scrutinize indemnification clauses and ensure they fall within insurable concepts of liability – for instance, clauses seeking indemnity for accidents caused by their own negligence are null in New York.
Termination
Parties may decide to terminate a construction contract for various reasons, including noncompliance with its scope, delays and unexpected expenses. It is essential that building contracts include specific termination clauses; without them, parties could face liability for damages for improper terminations.
Terminating contracts should not be done hastily; to demonstrate valid termination due to default, an undeniable paper trail must be prepared that includes invoices, receipts and progress reports proving breach or non-performance (such as failing to adhere to quality standards).
Wrongful contract termination can have devastating repercussions for both parties involved, often prompting one of them to file for breach of contract and seek legal compensation from the other party. A skilled New York construction law attorney can be invaluable, reviewing contracts to see if there are termination clauses and taking appropriate steps to implement them.
