Six steps to follow to ensure every construction contract is successful
Reviewing contracts can seem like an overwhelming task, especially when contracts can seem to pile up. In construction, there are often multiple contracts in different stages that need to be managed at the same time. There are many details that are specific to each construction job, and leaving any of them out can create confusion and the potential for issues to arrive throughout the construction job and after the job is complete. The steps outlined below can help you make the most of your time reviewing contracts and making sure each construction contract has all the necessary information to make your construction job run smoothly.
Read through the entire document
The first step for a construction contract review is to read through the full document to see if there are any obvious errors. This is a good time to make sure the blank spaces are filled out, and all sentences are complete. Also, be sure to note if there are any external documents or resources mentioned that they are easily accessible to reference, for example any blueprints or specifications that the construction job will be working with.
Verify personal information
Make sure that the name, dates, and any other contract specific information is filled in and correct. This information often shows up many times throughout the contract. It is important to check each place that it is mentioned to guarantee the information is correct. Both the site owner and the contractor’s information should be easily accessible and consistent throughout the entire contract.
Double check end dates
Verify that the end date for the contract is what was agreed upon during negotiations. In construction, the final date can move around depending on external factors that are out of both parties control. The end date should be flexible, but not so much that either party can be taken advantage of.
Unforeseen circumstances and unexpected issues
With any construction job, issues can arise that are out of the control of anyone involved. Weather, issues obtaining proper permits or licenses, or discoveries once the project has begun are all things that cannot be planned for. However, you can put terms in the contract to help resolve these problems. Make sure that there are protections in place for both the contractor and the property owner, and a pre-decided remedy to the issue that both parties have already agreed to.
Confirm payment terms
As a construction business, payment terms may be the most important element of the contract. During your review, check that the payment terms are spelled out very clearly. There should also be clauses in place that explain what happens if the property owner does not pay the contractor, or if after the job is complete, the property owner is not satisfied with the results.
Clarify any ambiguous language
When drafting a contract, avoid ambiguous language that could be open for interpretation for any of the parties involved. Some of this language might have been worked out during negotiations, but your contract review process should include a read-through to make sure all terms are clear for both parties.
Construction contracts contain many details that are specific to all parties involved. Reviewing your contracts carefully will save you future stress by making sure every aspect of the deal is finalized. Remember that each party involved is allowed to review the contract and make changes. There might be a few rounds of edits before the contract ends up being signed. To help simplify this process, AI contract review software like BlackBoiler can save you time and energy by reviewing contracts in minutes.
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