What are reasons to closely examine a construction contract?

As someone who works in the construction industry, you know that litigation can seriously delay a construction project. You might think your contract should be enough to diminish the chance of a serious dispute. But believe it or not, many disagreements happen precisely because a party to a construction project failed to read over the contract. 

It seems strange that some people would not read over their construction contracts, but it happens more often than you might think. Risk Management lays out some reasons why anyone involved in a construction project should take the time to carefully read over a contract. 

Contracts are different 

One reason that some people do not read over a construction contract is because they think it contains the same standards and terms that are present in most contracts, or “boilerplate,” as many people call it. In reality, contracts are not only different, but very specific to the project in question. Anyone who skips over parts of a contract risks not understanding their rights or obligations as they pertain to the project. 

Defining specific terms 

If you read over a contract too quickly, you might miss an accompanying list of defined terms. Many contracts have this list because the contract will make use of specific terms that the other party might not know about offhand. All parties should know what the terms mean not only for comprehension, but to understand qualifications or exceptions to these terms that might show up in the contract. 

Areas that may generate conflict 

Contracts spell out a lot of provisions so that all parties understand and agree to them before the project begins. These provisions may include the following: 

  • Terms of payment 
  • The scope of the project 
  • Milestones for completion 
  • Project schedules 
  • Damages for delays and unforeseen events 

Yet even though a contract may describe all of these in detail, sometimes conflicts between contractors and clients still break out over one of these provisions because the client did not read over the contract. In addition, contracts also contain notice provisions to give all parties a time frame to notify the other of potential problems. All parties should watch for these provisions as well. 

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