What Should Be Included In A Contract With A Construction Company?

When it comes to engaging a construction company, the most important step is ensuring that you have a comprehensive and legally binding contract in place. A good contract should clearly define the scope of work, payment terms, the timeline for completion, insurance requirements, and any other details relevant to the project. Having a detailed agreement in place will help protect both parties from potential disputes or misunderstanding down the road. Here are some key elements that should be included in your construction contract.

1. Construction Bonds

When a construction project involves public funds, the construction company may need to provide surety bonds, performance bonds, and payment bonds. The contract should clearly state who is responsible for providing these and how they will be managed. You can look for construction bond experts to provide this service. It’s important to ensure that the contractor has the proper insurance to cover any potential losses throughout a project. Also, make sure to get a certificate of insurance with the contract. 

2. Scope of Work

The scope of work is an important section of any contract with a construction company. This section outlines the specific tasks and responsibilities that the construction contractor or subcontractors will be responsible for, as well as when they are required to complete their tasks. It may also include information on the materials used, who will provide them, and how they will be paid for. The scope of work should also state the expected completion date and any milestones along the way that need to be met in order to ensure the project stays within budget. 

3. Payment Terms

A contract with a construction company should also include payment terms. This will specify how the contractor expects to be paid, including when payments are due and in what form they should be made (e.g., cash, check, or credit). It will also include any applicable late fees if the payments are not received on time. Additionally, the contract may address the possibility of changes in the price over time or during different parts of the project. For example, some contractors may charge more for additional materials that have to be purchased during the job. Finally, it should state who is responsible for paying sales taxes on services and materials used in the project. 

4. Warranty

You should make sure that the construction company provides some guarantee or warranty for its work and materials. The warranty should include a clause in which the contractor agrees to repair any defects in their services or materials within a certain timeframe. Also, you should check if the company offers any extended warranty for specific items such as windows, doors, etc. While this may cost you a bit more initially, it could save you from having to pay for costly repairs or replacements in the future. This may be especially important if you are working on a large-scale project such as a commercial building. 

5. Insurance Requirements

A contract with a construction company should include all of the necessary insurance requirements needed to protect both parties in case of accidents or damages on the job. This can include general liability insurance, workers’ compensation insurance, and automobile insurance for any vehicles used during the project. It is also important to be aware that some states may require additional types of coverage based on the type and size of the construction project. The contract should specify who is responsible for obtaining these policies and how much coverage is required as part of the contract. 

6. Liability and Indemnity 

This section should cover both parties’ liability, including any negligence on the part of either party. It should also specify an indemnity agreement, which means that if one party is sued as a result of the other’s misconduct or negligence, they’ll be responsible for all legal fees and damages. It’s important to ensure that this section is very clear and specific so that both parties understand the risks they’re taking. When in doubt, have a lawyer review the agreement before signing. This will help to ensure that both parties are protected in case of any legal disputes. 

A contract with a construction company is an important document that should include all of the necessary information and requirements for a successful project. It should cover the scope of work, payment terms, warranty, insurance requirements, and liability/indemnity. Ensuring that all of these elements are included will help protect both parties throughout the duration of the project. It’s always a good idea to have an experienced lawyer review the contract before signing it to make sure that it’s legally sound and meets all of your needs.

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