Well-drafted construction contracts can head off potential litigation. When expectations, timelines, costs and procedures are clearly defined at the outset, there is far less room for disagreement later. Without that clarity, even routine issues can escalate into claims that carry financial and reputational consequences.
Along with the time, expense and aggravation associated with a trial, construction firms and self-employed contractors usually depend heavily on word-of-mouth to generate business. Even a trial that ends successfully could cause potential customers to look elsewhere.
With the guidance of an attorney well-versed in the negotiation and enforcement of construction contracts, you can create an agreement that clearly sets forth key terms and expectations, such as:
- Estimated project timelines
- Rough project budgets
- Materials to be used
- Payment schedule
- Method of resolving disputes
Both estimated timelines and rough budgets for the project should include appropriate language limiting the company’s exposure in situations where adjustments are necessary. Supply chain disruptions caused by natural events or industry problems might delay the acquisition of specific materials or increase their cost.
Contracts can also include provisions about communicating delays and unexpected expenses to the client, as well as clauses indemnifying the organization or professional for changes that are necessary due to factors outside of their control. Written approval for material substitutions, changes to the scope of the project and modifications for the projected completion date or total budget can help protect the business from litigation prior to, or following, project completion.
An alternative dispute resolution clause can help protect construction firms and professionals from avoidable litigation by mandating that arbitration or mediation be used when a conflict arises. Contracts must also outline when and how the client should render payment, along detailing interest or penalties that accrue in the event of contractual noncompliance.
Reliance on fill-in-the-blank or generic documents can leave construction professionals and companies exposed to legal risk if there is a dispute with a client. Working with a construction law professional to draft, review and negotiate an agreement can limit the risk of going to court over a project dispute.
Hayes, Berry, White & Vanzant, LLP helps individual contractors and construction businesses in Texas develop thorough contracts, maintain regulatory compliance and resolve disputes efficiently. You can schedule an initial consultation in our Denton, Flower Mound or Gainesville location by calling 940-230-2386 or contacting us online.
