As a construction professional, you’re familiar with contracts, generally one or more written pages outlining the work on a project and the terms and conditions of payment for that work. While you can have an oral contract for a small project, it’s always good practice to get a written agreement, especially on larger projects to ensure everyone is clear on what’s involved. Even more than simply writing a brief agreement, how can you be sure that your contract will be enforceable if something goes wrong or the responsible party is reluctant to pay? To ensure you have an enforceable contract on your construction project there are certain key terms to become familiar with and to make sure you include in every contract on every job.
What to Include in Every Enforceable Contract
Construction contracts should include or reference an outline of the work that will be completed, who will determine when the work is completed, how payment will occur, how change orders will happen, and who the responsible party is. Depending on the state the project is conducted in, your contracts may include standard lien waivers and other terms designed to protect both you and the person you’re working with against problematic behavior.
It’s also important to note that the contract is an agreement, meaning that both sides agree to the terms contained within the document. So if you’ve been offered a contract for a job and, after review, you see something you’re unsure about, speak up and get it changed before signing the contract.
Intent to Bind
The purpose of the signatures at the end of the document, and often the initials you are asked to sign on every page, is to serve as a symbol for both parties of their intent to be legally bound by the document. Contracts may also include clauses stating that they intend to bind both parties, how to handle disputes, and that you’ve had the opportunity to run the contract by your legal team. If you’re unsure about a term in the contract, don’t sign it and hope things work out for the best. Instead, ask for an extra day and get the contract reviewed by a professional.
Exchange of Value for Consideration
One key element of enforceable contracts is the exchange. You’re providing something valuable like your time, energy, resources, materials, and more to a project in exchange for consideration (generally money). A contract that involves you giving without getting anything in return is generally not enforceable.
If your contract meets these elements then, most of the time, it is an enforceable contract. That said, there are a number of other situations that could make the contract unenforceable, difficult to enforce, or even impossible. For example, no matter how well the contract is written, it can’t ask you to do something illegal. Looking out for these details is what the team at National Lien & Bond does for our clients. If you need assistance with contract review or with a contract that is not being enforced on work already completed, reach out to our construction law specialists for a free consultation.
This blog is for educational purposes only and not intended for legal advice.