Construction Contract Attorneys: Understanding Construction Contract Negotiations and Drafting
Parties to construction contracts should pay close attention to the language of their agreements so as to ensure that their interests are fairly and adequately protected. It is important for the contractual agreement to set forth the respective rights and obligations of each party to the contract. Using a construction attorney to negotiate and draft one’s construction contracts can save significant amounts of time, headaches, and, most importantly, money for all involved.
What are Examples of Different Types of Construction Contracts?
Construction contracts can be drafted in different ways depending on the type of project and the goals of the parties involved. For example, a unit pricing contract will detail how much the cost per unit of labor and materials will be. This contract type can include factors like cost per square foot or cost per ton and/or other measurables, such as $1,200.00 per ton to furnish and install rebar. A fixed-price construction contract, or “lump sum” contract, covers the total price for all services, materials, and labor included in the project. A time and material construction contract allows the contractor to receive compensation for labor and materials at a pre-negotiated rate or cost for such labor and materials A cost-plus construction contract allows the client to pay the contractor’s actual costs for material, labor, and expenses, along with a fixed fee or percentage of the actual costs. There are many other different types of contractual arrangements and relationships between parties to construction contracts as well, such as design-build contracts, construction manager-at-risk contracts, or labor-only contracts, to name a few.
Why is the Drafting of Construction Contract So Important?
The goal of effective contract drafting is to help a project flow smoothly and to mitigate or even fully avoid conflicts that may arise in the future. Construction projects are very complex, and, if not managed properly under the guidance of a well-written contract, can result in a costly legal battle. Lawsuits related to construction projects can emanate from any number of conflicts on the job ranging from delays, non-payment, or even defective work. While some conflicts may arise throughout the project, others may present themselves during the “warranty period” or even potentially well after the project has concluded. Disputes can range from latent defective work to claims for nonpayment for “extra” work, or from insurance coverage for damaged materials to indemnity obligations against claims for injuries to persons or property. For this reason, and to avoid any potential surprises during the project or even long after completion, it is critical to have an experienced construction lawyer review your contract prior to binding you or your company to any unfair and potentially devasting contractual terms.
How are Construction Contracts Negotiated?
Often times, construction contract templates are used for the particular contractual arrangement between the parties, such as those promulgated by the American Institute of Architects or Consensus Documents. After a construction contract is drafted and reviewed, the process of negotiation can begin. This is the opportunity for parties on all sides to address any concerns and discuss desired revisions to the contract. While both parties may have to compromise on certain provisions during the negotiation process, the end result is generally a more equitable contract for all parties involved. Prior to executing any contract or beginning work on a project, it is essential to understand the ramifications, implications, and potential consequences of every provision in your contract, as well as your own particular
“bargaining power” in performing contract negotiations. This is why it is important to have an experienced construction lawyer involved in the process.
At LAPEROUSE Law our goal is to advise our clients on best practices to avoid the pitfalls of poorly drafted contracts which may leave clients vulnerable to future disputes. With decades of experience, LAPEROUSE, LAW consistently works to achieve this goal.