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Quick Tips To Protect Your Rights in a Construction Contract

As described above, seemingly simple contract provisions may be surprisingly complicated. Take the time to understand the entire contract, and take the steps necessary to protect your interests, as follows:

  • make sure your contractor has a license
  • verify with your contractor that he or she is insured (contractor’s risk, workman’s compensation)
  • check your contractor’s references and consult the Better Business Bureau for further information
  • review any contract the contractor provides to you – make sure it is clear and complete
  • consider hiring a professional to review the plans and specifications
  • consider hiring an attorney to review and explain the contract to you, and most importantly, do not be afraid to negotiate the contract with the contractor.

THINK ABOUT BEFORE SIGNING A CONTRACT :

1. TIME FRAME. The agreement should 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.

2. PRICES. 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.

3. PAYMENT METHOD. 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.

4. PAYMENT PENALTIES. Determine whether there are late payment penalties and if they are reasonable.

5. MATERIAL 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.

6. TRANSACTION RULES FOR PARTICULAR INDUSTRIES. 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.

7. INABILITY TO AGREE. 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 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.”

8. RESOLUTION OF ANTICIPATED DISPUTES. 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.

9. ANTICIPATED PROBLEMS. 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.

10. ATTORNEYS’ 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.

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