Construction contractors are required to engage with clients on a regular basis in order to maintain their business. Some of their projects are complex or they can be short term, but all contractors run the risk of liability either by the customer or their vendors if they forget to have a proper contracting agreement in place before they begin working.
Contracting Agreement Protections
In addition to the fact that a contracting agreement is a protection from liability, it is also protection against client and vendor non-payment and negligence on the part of subcontractors engaged by the contractor.
It is fairly simple to develop a contracting agreement that incorporates all facets of a potential project. The key point is that the contracting agreement must be developed before work begins and must be mutually agreed upon by contractor and client. When creating a contracting agreement, it is a good idea to consult a lawyer to make sure that all the parties are protected.
The most basic format of a contracting agreement begins with a proposal for work to be performed. This includes:
- Scope of work to be performed by the contractor, outlining the basic reason for the project
- Work to be performed by the contractor specifically
- Work or equipment to be provided by the client, (for example, building permits, construction drawings or special equipment owned by the client.)
- Terms of payment by the client, including schedule of invoicing from the contractor
- Certificate of performance that includes any contractor legal exemptions such as liability disclaimers or force majeure
- Equipment or performance warranty
- Contractor/Client signature page wherein the contractor and client assign their signature agreeing to all aforementioned contracting agreement terms in the proposal.
Without the protections from a contracting agreement, the contractors could be left without the proper materials or payment or the client may be left with a partially completed or unacceptable job.
Types of Contracting Agreements
There are several types of contracting agreements. For some contractors, prior written communications, such as work requisitions, may precede the formulating of a contracting agreement. While many details can be worked out verbally, it is important that everything that is absolutely critical ends up in writing. Verbal contracting agreements can be very difficult to enforce, as they require a lot more documentation than is usually available.
When creating these contracts, it is important that you have the proper language and that everything is properly signed and recorded. Contracts will always be upheld in a court of law, provided that they are not unreasonable or contain unenforceable sections. Make sure you do your research and get your contract properly written so you and your workers are protected.
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Jenn Montgomery is a freelance writer, editor, and blogger based in San Diego. She writes on a variety of topics and enjoys learning new things. She graduated from San Diego State University with a degree in Rhetoric and Writing Studies. In her free time, she enjoys hiking, baking, and knitting. You can contact her on Twitter.