Why You Need A Lawyer To Work On Your Construction Contracts?

Using the counsel of an experienced attorney, you can understand your contracts better and avoid risks. The lawyer can identify areas of negotiation, suggest appropriate changes to make the provisions more clear, add clauses for your protection, etc.

Typically, a construction work starts after a legally binding contract is signed between the owner and the builder. At times, the contracts signed by owners or builders pose significant risks to them and result in litigation. But it is possible to avoid such risks by exercising awareness of key provisions. If you are a construction contractor or the owner, you need to hire the services of an expert lawyer to guide you with your construction contracts.

The specialized lawyer working on your construction contracts ensures that your contract includes provisions for proper notice requirements; its terms & conditions are reasonable; it has details of job site conditions, insurance, & scheduling details; it accounts for any unforeseen circumstances, and it is legally sound.

If you have already prepared the contract, you could contact a good construction lawyer to make revisions in your existing contract.

Every construction contract is of one of these four types

A construction lawyer can help you with different types of contracts. Usually, conditions like the method of disbursement, duration, quality, specifications, etc. determine the type of construction contract. These include:

  • A fixed price contract

Under this type of contract, the buyer agrees to pay a lump sum price to the builder for completing the project. This contract provides certainty of cost to the owner as the builder takes the risks of project cost going up or down. If you are a builder, you could include some percentage of the hidden cost associated with the risk in the fixed price.

An owner could include provisions for liquidated damages in the contract. It means that the builder gets incentives for completing the project before time and bears penalties for delayed completion. This type of contract is used when the owner and builder have mutually agreed on the project scope and defined accurate schedules.

  • A cost-plus contract

Under this construction contract, the owner pays the actual costs of material, purchases, other expenses related to the construction activity plus an amount based on a set percentage for the builder.

The owner bears the risk of uncertainty in this contract. Such contracts could be structured in various ways like Cost Plus Fixed Fee, Cost Plus Fixed Percentage, Cost Plus with Guaranteed Maximum Price Contract, and Cost Plus with Guaranteed Maximum Price and Bonus Contract. Such a contract is used when the scope is not defined, and the owner can exercise limitations.

  • The time and material contract

The buyer pays for the actual cost of construction plus the time spent by the builder and his subcontractors. The owner and the builder agree on an hourly or daily rate. The contract must provide for and classify the costs as direct, indirect, markup, and overhead.

The owner takes the risk of paying for the extra cost or delayed work. To minimize risk, the owner could impose a cap on the time taken to complete the project. The owner could also impose a maximum price clause in the contract. Such a contract is suitable when the scope of the project is small and the approximate time required to complete it is measurable.

  • Unit pricing contract

The owner and the builder decide on a price for a unit of a unitized item, of which the owner orders a pre-determined quantity. The bidding process helps determine the unit price. This contract allows both the parties to easily adjust the unit price up or down in case of scope changes and determine an agreed amount.

Finding a lawyer for your construction contracts

Rather than relying on references, you could find a suitable lawyer from LawTally. You could select a lawyer proficient in structuring a construction contract and experienced in handling all types of contracts. LawTally has a vast database of lawyer information. Using its smart searches, you could easily find the best construction lawyer.

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