Construction Contracts

What is a construction contract? At its most basic, a construction contract is a contract between a home owner or other buyer and a construction professional or a construction company. The basic construction contract includes terms and conditions to protect both parties in the event of a dispute or non-performance.  

You may be surprised to find that residential construction contracts are equally as common and just as important as the construction contracts written for commercial construction projects.  

A basic construction contract will include the definition of the parties and contact information for both parties. The contractor is typically responsible for the performance of any subcontractors, so the buyer will look to the contractor to ensure the terms of performance of all parties performing work on the home, building, business or structure.  

Other terms and conditions in a basic construction contract include a full definition of the scope of work – that is the work the contractor will complete as part of the construction project. Sometimes, a construction contract will include a list of materials and the costs associated with those materials.

Construction contracts can be fixed price or time and materials. In a fixed price construction contract, the contractor will perform all services for the fixed price quoted in the contract. In a time and materials construction contract, the contractor will quote an hourly rate for labor and the buyer will pay for the hours and for all materials required to complete the construction. In this type of contract, it is important that the terms include an obligation for the contractor to track and report all hours worked so the buyer understands who is working on the project and the hours devoted to the project and can check the hours for accuracy.  

A thorough construction contract will also include conditions that define how disputes will be handled, whether the parties will participate in arbitration or if and when they can and will go to court. The contract should also specify the state laws with which the contract and any litigation must comply. 

Whenever you contemplate an addition to your home or business structure or a new structure, you should always sign a construction contract. Use an attorney if at all possible, and one who has plenty of experience in this domain.