Some Construction Contract Basics- Necessities and Pitfalls

Construction Work

Construction Work (Photo credit: gullevek)

Recently, I’ve been on an “advising” kick here at Construction Law Musings. My last two posts have been about communication and trusting your gut when it comes to a smooth construction project. This post will be the third in the trilogy (and who knows maybe I’ll have a 4th and 5th like the Hitchhiker’s Guide to the Galaxy “trilogy”).

While all construction contractors should use their communication skills and instincts to assure a smooth and hopefully profitable project, all of the gut following and great communication will not help you if your contract is not up to snuff. In the spirit of giving you a few basics things to look at, here’s my list of three basics that you need in your contract and a three things to be on the lookout for in others’ contracts.

First, the good stuff that needs to be there:

  1. Attorney Fees Clause– without it, a Virginia court (and most other courts) will not award you a judgment for any attorney fees spent to protect your rights.
  2. Dispute Resolution– whether the specified resolution is through the litigation process, ADR or some combination, such a clause or paragraph will only help define the parameters of what happens with a claim.
  3. Detailed scope of work– Without the proper detail in the scope of work, the parties cannot properly set expectations and know what happens when things change.

Now, the pitfalls:

  1. Mechanic’s Lien Waiver– Yes, Virginia, you can waive your lien rights by contract in my fair Commonwealth. Look for this in your contracts.
  2. Non-Specific Arbitration Provision– While I am not a huge fan of mandatory arbitration where the dispute resolution paragraph simply cites to a set of rules, a more specific and detailed arbitration clause could actually work.
  3. Over-broad Indemnification– Generally, you should be held accountable for your direct actions and possibly those of your lower tier subs. However, negotiate hard if you are faced with broad language such as “arising from” or “indirectly related to” your work. This language is great for construction lawyers, but not for contractors.

Of course, the specifics of any construction contract need to be carefully reviewed, preferably with the help of an experienced construction attorney.

Are there others that you run across that you feel need to be added to the list? Let me know.

As always, I welcome your comments below. Please subscribe to keep up with this and other Construction Law Musings.

 

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9 Responses to Some Construction Contract Basics- Necessities and Pitfalls
  1. […] I have been on an “advisory” kick here at Musings. My latest post on contract necessities and pitfalls tried to point out a few basic highlights for you, as a construction contractor or subcontractor, […]

  2. […] I have been on an “advisory” kick here at Musings. My latest post on contract necessities and pitfalls tried to point out a few basic highlights for you, as a construction contractor or subcontractor, […]

  3. […] Musings, I have discussed the need for clarity of contract, trusting your gut, and assuring that your contract has the necessities. All of these bits of advice (along with my usual advice of working with an experienced […]

  4. […] your contract requires certain steps such as informal resolution attempts or other items, these are the first things that must be done […]

  5. […] your contract requires certain steps such as informal resolution attempts or other items, these are the first things that must be done […]

  6. howard i. littman, aia
    June 4, 2015 | 10:11 PM

    Chris, just one quick reminder: often overlooked are insurance provisions that shift risk in an onerous manner, and which at times require parties to provide policies that carriers simply cannot provide (on a commercially reasonable basis). No party to a construction contract should sign on the dotted line until reviewing provisions with the intended carrier (as to both coverage issues and costs).

  7. […] company can or should bid or negotiate work with an eye toward litigation (aside from having a well written contract that will be enforced to the letter here in Virginia). Particularly on “low bid” type […]

  8. […] missed anything when giving you a price, or yes (and you knew this was coming), being sure that your contracts are written as they should be and cover the bases. To use another construction related analogy, these types of basic practices […]

  9. […] fees, expert expenses, court costs and the like, can be made part of a judgment on the back end if your construction contract is properly drafted, these costs are hard expenditures that are made on the front end with hopes of recovery at the […]

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About Musings

I am a construction lawyer in Richmond, Virginia, a LEED AP, and have been nominated by my peers to Virginia's Legal Elite in Construction Law on multiple occasions. I provide advice and assistance with mechanic's liens, contract review and consulting, occupational safety issues (VOSH and OSHA), and risk management for construction professionals.

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