Construction Contracts: Why a Handshake Is Not Enough
Business deals, especially in the construction industry, have traditionally relied on handshakes. However, this is no longer the 90s and you need more than oral agreements or verbal promises to prevent possible conflicts and disputes from arising in the future.
Business lawyers can swiftly and easily draft a construction business contract and ensure all the terms and conditions are fair and valid. The primary purpose of a written contract is to keep tabs on any potential alterations from the originally agreed terms and to resolve the situation without compromising your interests.
Essential Provisions in an Alabama Construction Contract
Many contractors operated for decades without running into any serious conflicts or disagreements over project terms. In relation to this, things can take a pretty nasty and expensive turn if a disagreement does arise. The consequences of such disputes can be disastrous. Comprehensive and clearly written contracts can save all parties a lot of money, headaches, and time.
You probably don’t need a 100-page behemoth contract. Moreover, you need to ensure that these features are clearly included in your construction contract:
Scope of work
There should be clarity about the jobs that a contractor or subcontractor has to complete. You should also mention who will pay dividends in case a dispute occurs over what is done or not done.
Timing of the work
Construction delays are common and inevitable. They usually result in finger pointing. Contracts can clearly lay out the deadlines. Any exception to the deadlines or the cost associated with a delay can be mentioned in the contract as well. This can prove to be just the balm required in such painful situations.
What if the contract doesn’t make any progress payment or a subcontractor is unable to complete the job? These questions can be addressed to avoid ambiguity.
Terms of payment including how and when the payment will be made can be addressed through a contract. Nobody wants to work for free. The last thing needed by a construction professional is a dispute over the payment terms. There should be a good understanding of retainage. This subject often causes disagreements and confusion.
How are the parties meant to handle disputes over certain aspects of the project? Disputes may result in a stoppage of work and stalemate without a contract for handling them. These kinds of conflicts don’t benefit anyone and only cost money and time.
This list is not exhaustive and there can be other provisions that you find necessary to enter into your construction contract. You should consider speaking with a business attorney that has experience in the construction industry to create an iron-clad contract.
Why are Handshakes No Longer Enough in the Construction Industry?
Disputes can arise
‘Shaking on it’ can spell disaster in the business world. Disputes are inevitable when one party considers the handshake deal to be legally binding and the other doesn’t. Written agreements can solve this. It can also make it easier to resolve disputes. Each party’s credibility gets questioned or established by a judge when handshake deals go to court.
Difficulty in enforcing the terms
You will need to prove the terms of the handshake deal and what they mean in order to enforce them. Interpretation of the terms may be very different from the other party. They can also just lie about whatever was agreed if they realize the terms are not favorable to them.
You need testimonies from all parties and details about how the parties acted before and after the deal was made to prove the terms of the handshake deal. More often than not, parties’ testimony devolves into a ‘he said, she said’ argument. Inconsistencies in the rendering of events are another reason why handshake deals are unreliable and not credible.
Recalling different versions
It can be difficult if you and your trading partner remember different versions of the truth. It doesn’t matter who is lying, when people work together, they need to be on the same page. This is unfortunately quite common in contractual agreements.
For instance, you and a subcontractor may have shaken on a particular price for a job. However, the prices of raw materials have increased since. The sub-contractor may go back on their word or ask for more. It doesn’t matter who is right or wrong in such situations.
Written Agreements are Always Helpful
Players in the construction industry try to be optimistic about the future of their contractual relationships and don’t want to think about bad things happening. Unfortunately, everyone cannot be trusted. There may be some people that fail to agree or cover all aspects of the construction business deal. Memory tends to fade as well. You or the other party may find it difficult to recall certain terms of the deal down the road.
Choose an Experienced Alabama Business Attorney for Your Construction Contract
The right construction business attorney can make the management, presentation, and negotiation of your contract agreements legible and simple. The skilled lawyers at BHM Law Group can draft construction contracts that reduce the risk of unfair deals and future disputes. We are happy to provide you with the legal assistance you need to take your construction business to the next level. Call us at (205) 994-0902 or reach us online to schedule a free consultation.