What to include in a construction contract and how to handle disputes

On Behalf of | May 7, 2020 | Construction Contracts |

Before starting a construction project, it is important for all parties to sign a contract. A well-designed contract clearly defines terms and expectations, and it should protect all parties involved.

A contract should also outline what happens if there are disputes along the way. This eliminates the unknown and often speeds up the process.

Contract considerations

According to FindLaw, both parties should customize a contract for the specific project, but there is some basic information to include in most documents. The contract should include prices for everything, including potential additional work. Include payment terms, such as a lump sum, installments or pre-payments.

Include time frames, which will help determine the completion date. There should also be terms in regard to the material and goods used.

Dispute options

One of the inclusions of a construction contract is how to handle potential disputes. According to Harvard Law School, there are three common ways to resolve disputes. The best-known method is litigation. This involves the two parties facing off in front of a judge and possibly a jury. Attorneys present evidence, which helps determine the ruling. All proceedings, and the ruling, are public record.

Litigation is expensive and time-consuming, so many prefer alternative methods. One is mediation, in which a neutral third party guides both sides through negotiations and helps them come up with a resolution on their own. The decision is nonbinding, which means there is no legal obligation of either party to agree to the terms.

The third method is arbitration, which combines aspects from both litigation and mediation. Each side presents evidence to a neutral arbitrator. The arbitrator then makes a decision based on the information. Most decisions are binding.

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