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Construction Contract Law

Construction Contract Law

A well-drafted construction contract clearly sets out the work to be done, the price to be paid for the work, and the terms and conditions of payment. The contract should also allocate various foreseeable risks between the parties. When the parties allocate a list of potential risks, the contract becomes longer, but it reduces the potential for disagreements in “gray areas” that are not addressed at all – assuming that both parties take the time to read and understand the lengthy, dryly-worded document. Of course, failure to read a written agreement is not a valid defense.

At some point you will probably find yourself wondering whether you should really sign the contract in front of you. If you order items from a-door-to door salesman, hire a contractor for a home improvement project, or go to work for someone as a consultant, you will be faced with a document, hopefully, designed to protect both you and the other party. Ideally, a contract allows the parties to define, in specific terms, the extent of their obligations to each other relative to the delivery of products or services and payment terms. When the contract is signed, it generally cannot be changed unless both parties agree. Consequently, it is important to protect yourself prior to signing a contract by understanding exactly what it is you are committing yourself to. Use the following list as a general guide. Make sure construction contract terms are workable for you. If they are not, attempt to negotiate terms that are more reasonable. Here are some of the things that you should make sure are in your contract.


We’ve seen many contracts with NO deadline to complete the project. I’m not kidding you. The agreement must have a time frame if any aspect of your transaction will occur in the future. If you are the party delivering the services or goods, make sure that you are allowing yourself enough time to complete the job. If you are the party receiving the goods or services, make sure that the delivery schedule conforms to your needs. If you want to contract for month-to-month services, make sure that you are not signing an agreement that obligates you for a longer period. Can you imagine wanting to move into your house or commercial building but there is no provision requiring the contractor to get it done on or before a certain date? Make sure there is a deadline in your contract.


The agreement should clearly state prices. Be wary of additional charges that you have not discussed with the other party. For example, when you contract with a professional, you will often be quoted an hourly rate that will not include additional charges for things like photocopying and postage. Make sure you know what the additional fees are and ask for an estimate.

How are you going to pay for it?

Determine the terms of payment and whether it is appropriate to your financial situation. For example, the contract may call for payments at the end of the month when the majority of your bills are due. You may also be able to negotiate installment payments if you cannot afford a lump sum. Determine whether there are late payment penalties and if they are reasonable.

Other Terms

If you and the other party have an understanding about the goods or services, make sure that the particular terms are in the contract. For example, if you have agreed to make a collection of dresses out of silk-like polyester, then it should be in the contract. This will help you make your point should the buyer demand that the dresses were supposed to be made of silk. Particular industries have rules by which transactions are governed. If you see something in a contract that makes an assumption of following a particular industry procedure, but doesn’t set out the procedure in the contract, make sure you know what the industry procedure is before you sign.

Trouble with Agreements

If you need to have work started immediately, but cannot come to an agreement on the final terms of an agreement, you need to make sure that you are signing a construction contract that is not going to be enforceable as a permanent agreement. You can accomplish this by adding language like, “This interim agreement is in effect only until a more permanent agreement can be negotiated by both parties.”

No matter how careful you are or how good your relationship with the other party, a dispute may arise. Many contracts include an arbitration clause, which means that a dispute must be settled in arbitration as opposed to in court. Arbitration is generally less costly and less formal than court, but if you sign the contract with the clause intact, you have probably waived your right to take the matter to court. The party with whom you are contracting may have had prior experiences that have led it to add particular methods of resolution to the contract. Those ideas may be perfectly agreeable, but they could also be unfairly beneficial to the other party. Analyze whether these terms will benefit you.

Provision for Attorney’s Fees

Determine whether you will be charged for the other party’s attorney’s fees if you breach the contract and lose the case that will probably arise to enforce it. If you are prone to breaching contracts, this is the kind of clause you should avoid.

Construction Contract Lawyer Free Consultation

When you need legal help with a construction contract, please call Ascent Law for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506