Tips for avoiding commercial construction contract disputes

Running a construction company can be fruitful, but that doesn’t mean you won’t have challenges. You are going to have to complete projects on time and at a competitive price and manage customer relations.

One thing that can help with this is having watertight contracts in place. Nonetheless, a contract is only as good as the specific provisions that it includes. A dispute over a contract can cost you both time and money. Recognizing some of the more common causes of commercial construction contract disputes could help you to prevent them in the future. Here are questions every contract should answer:

What’s the scope of the project?

You can’t really start until you have an agreement about the scope of the work – and an agreement about payments and costs. This should include a timeline for progressive payments and when the final payment is due.

What happens if there are delays?

Few construction projects are completed without at least some small issues. Something that you and your client have to be prepared for is potential delays. How are you going to get the project back on track when delays arise? Will there be any cost differences for the client? Having clear provisions in the contract for such a scenario will help to prevent disputes that halt progress even further.  

What happens if there are changes?

A delay could mean that you need to change the scope of the project. For instance, using a different type of material may allow you to catch up on time, without sacrificing the quality of the completed project. Nonetheless, your client needs to be aware of what’s going on. Changing specifications without offering any notice could run the risk of your customer believing they haven’t received what they paid for.

Can the project be stopped?

All contracts should contain provisions that cover multiple situations, including the worst-case scenario. You may decide that completing the project is just unfeasible, or the customer may want to back out. All parties to a contract need to know about their rights to cancellation.

A sound contract protects all parties. It’s better for you to get it right the first time, so make sure you seek some legal guidance when drafting up agreements. If your construction business needs help with its contracts or you’re in a dispute over a contract’s terms, we can help. Contact us for a consultation.