Considering the numerous issues that can arise during an engineering project, creating a solid foundation through an engineering contract is essential to reduce liability.
Furthermore, your contract must comprise all the key components to offer the best protection against legal problems. So familiarize yourself with them before initiating your project.
This blog post will guide you on the essential elements that you must include in your engineering contracts.
What is an Engineering Contract?
Let’s start with what an engineering contract is. An engineering contract is a written or spoken agreement between an engineering contractor and their client that is enforceable by law. It is crucial for both parties to agree on specific terms and conditions, as well as the obligations and responsibilities involved.
Engineering Contract Review: Essential Elements
Before you begin your engineering project, make sure you’ve reviewed the contract and ensured it has the following elements:
Both Parties’ Legal Name and Address
This obvious element is among the most critical, but many still fail to heed it. If either party to the engineering agreement isn’t listed and hasn’t signed, the contract won’t be legally binding. The contractor and property owner should keep their respective records to back their argument in case of a dispute.
The contract should leave no doubt regarding the cost of services for the engineering project and anything else beyond its scope of services. It’s not unusual for engineers or contractors to add extra charges that weren’t discussed. But the contract clearly states the services and the possibility of additional costs.
Terms of Payment
All engineering contracts must clearly outline the payments schedule alongside the terms and conditions relevant when paying amounts due. This section should be precise to remove any misunderstandings.
The contract should mention whether the payments will be made via monthly installments or in a lump sum. If it’s the former, negotiate a schedule of the most practical dates and agree on whether late payments will attract a penalty.
Schedule of Work
The contract document should establish a vivid notice to proceed date, engineering project start date, and completion date. It should also differentiate between work days and calendar days and might state that the contractor isn’t responsible for delays caused by the client in acquiring the required approvals, permits, and easements or for delays resulting from bad weather.
When deciding the work schedule, account for suppliers’ lead times and document any extra time required for change orders.
Scope of Work
This is a general, mostly ambiguous term describing the engineering work expected to be completed under a specific contract. The agreement must have a thorough and clear explanation of the expected services, including the materials, quality, schedule, and any other relevant details.
Dispute Resolution and Termination
Be sure to include the process to be followed to address disputes and beat any hurdles that may come up during the project. For instance, you may need an arbitration clause that encourages solving disputes outside the courts. You may also state the mistakes or terms that, once breached, could cause the contract to be terminated. Be as specific as possible to avoid headaches in the future.
An engineering contract must have clear terms and conditions, perfectly capturing the obligations and expectations of each party. Ensure your contract has the crucial elements above for a favorable binding agreement. If you want to further optimize your contract review process you can use contract software like BlackBoiler, that can quickly create an engineering contract that has all the essential terms and conditions using our contract generation feature. Using technology in your contract review process can save you money and reduce risk. Request a demo today!