Construction Contracts

Sometimes, construction contracts are peppered with confusing terms and longwinding legalese. Sometimes, they’re just too laborious to read. It nevertheless pays to go over your contact thoroughly, to make sure you don’t unwittingly sign into hidden contractual traps.

Essential Terms

Basically, you need to make sure that all the essential terms in a contract are present. Otherwise, the contract won’t even be valid at all.

An essential term is one which must be agreed to, without which no contract comes into existence.

For example, completing the works by a particular date, or working to a particular programme. If you and your contractor fail to agree upon a date for completion, or a programme for the works, you have no valid construction contract.

Important Clauses

Aside from making sure that there is privity in terms of consideration and subject matter, you must also make sure that your contract contains clauses that relate to its execution.

One of the most important provisions are with regard to the payment schedule, which could be any of the following: lump sum, measurement/remeasurement, cost plus, contractual quantum meruit, variations, loss and/or expense, etcetera. Make sure that the specific basis for remuneration is in contract, and that it’s clear.

Your contract must also have provisions on repudiation, termination, and breach.

Specifically, those are embodied in the following:

Termination Clause

Variation Clause

Payment Clause
Dispute Resolution Clause
Exercise Caution: Other Pertinent Provisions to Watch Out For
Finally, look out for provisions that have to do with who will ultimately be liable in case a problem ensues. These are are following:
No Damage for Delay Provision – this provision would prevent you from claiming damages should the contractor incur delay in construction.
Contractors Review of Documents Provision – this frees the owner (you) of liability when building defects develop.
Indemnity Provision or Clause – this clause requires one party to assume responsibility for third party claims made against the other party.

How We Can Help

If you need more information to help you in you construction contract review, feel free to contact us, so we can brief you on everything you need to know to protect yourself. First consult is absolutely free.