Free Construction Contract
Construction contracts are agreements entered into by a company and the client for the purpose of a completing a construction project. That project can be related to houses, commercial renovation, home improvements, garages, storage units and more.
A verbal agreement is valid but a written agreement is more preferable as it clarifies the roles and responsibilities of each party associated with the contract.
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Here are some of the basics about construction contracts.
1. There are many parties involved in a construction contract other than the builder and the client. They are contractors, subcontractors, designers, suppliers, etc.
2. There are many risks associated to a construction project. Risks like duty allocation between the parties, division of risks between the parties, the existence of uncertainty surrounding the entire project, etc. Construction contracts are entered into to help mitigate or eliminate these risks.
3. In cases of disputes, these construction contracts can come in handy in court of law. If the person whom you are entering into a contract is very close to you and someone whom you can trust completely and think there are absolutely no chances of conflicts or disputes with the person in the future, then the construction contract can be entered into verbally. But if it is the other way round and the person whom you are getting into a business deal with is relatively new to you, then it is preferred that you stay out of the verbal deal and stick to the written agreement.
4. The contract can be either is signed on with stipulated values or some lump sum amounts. The latter is preferred by the company as it discharges it from all its duties and it now is the responsibility of the contractor to discharge all the duties as far as the financial aspects of the agreement is concerned.
5. There is a term used in construction contracts called cost-plus contract which means the company will pay for the extra overhead expenses incurred by the contractor during the period of the contract. This basically takes place when there are no fixed plans or budgets given out by the contractor.
6. For better protection of the company or the owner, there is something called the guaranteed maximum price. This price is basically the cap amount or the maximum amount the company is willing to spend for the project and it is the duty of the contractor to finish off that project within that stipulated budget. If at all the expenses incurred are beyond the cap amount, then the contractor is responsible to clear them. The GMP (Guaranteed Maximum Price) keeps changing for each project depending on the range and complexity of the project and it is agreed upon by both the parties before entering into the project.
7. There are some contracts that come under the private sector which could be negotiated. Some of the other contracts that come under the public sector cannot be negotiated and has to be competitively bidden upon by the different contractors who are willing to take up the project.