What To Check Before You Sign a Construction Agreement

Note: Want to skip the guide and go straight to the free templates? No problem - scroll to the bottom.
Also note: This is not legal advice.

Introduction

Navigating the complexities of construction agreements requires a level of expertise that not everyone possesses. That’s why it’s important to take the time to review and understand the agreement before signing on the dotted line. By doing so, you can ensure that all parties involved are clear on their rights and obligations throughout the project, helping to protect against any potential delays or disputes.

The Genie AI team recommend taking a few simple steps when reviewing a construction agreement. Firstly, you should check that the scope of work is clearly defined and includes information such as type of work, timeline, budgets and roles for each party (e.g. architect, engineer contractor and owner). Having this detail written into the agreement enables everyone to be aware of who is responsible for what throughout the project - fostering effective collaboration between all parties involved.

It is also essential that potential risks are addressed in a construction agreement - such as outlining processes for resolving disputes or identifying any liabilities or damages. If these details are included in the document then it helps protect all those involved against any unexpected issues along the way.

Finally, you should ensure that there is an agreed payment schedule present in your construction agreement which outlines when each party will receive payments (and what consequences apply to late payments). This helps keep projects moving at a steady pace by preventing delays due to lack of payment - making sure everyone receives their agreed upon compensation too!

These are just some things to consider when reviewing your construction agreement - but remember: every project is different so consensus may vary depending on its specific requirements! For specific advice tailored to your situation and full access to our free community template library today – read on below for more information from Genie AI’s experienced legal experts!

Definitions (feel free to skip)

Agreement: A contract or arrangement between two or more parties.
Permits: Official authorization from a government or other authorized body to perform a certain action.
Building Code: A set of laws and regulations that set standards for the construction and maintenance of buildings.
Payment Terms: The conditions under which payment is made.
Performance Bond: A type of surety bond that guarantees the satisfactory completion of a project.
Ambiguity: Uncertainty or lack of clarity in the meaning of words or phrases.
Dispute: A disagreement or argument between two or more parties.
Mitigate: To make a situation less severe, dangerous, or painful.
Negotiate: To discuss in order to reach an agreement.
Liability Waiver: A document that releases one party from legal liability for any damages caused by their actions.
Approvals: Official permission from an authority to do something.
Lien Waiver: A document that releases a lender from the legal right to claim a debt from the borrower.

Contents

• Overview of the Construction Contract
• Reviewing the Contract Terms
• Identifying Potential Risks
• Negotiating the Contract Terms
• Understanding Liability Waivers
• Obtaining Necessary Approvals
• Completing the Contract
• Establishing Project Documentation
• Setting Timelines and Deadlines
• Managing the Project

Get started

Overview of the Construction Contract

• Read through the entire contract and make sure you understand what is expected of you
• Take note of any important deadlines, including when the project needs to be completed
• Make sure all parties involved are identified and that their roles are clearly outlined
• Check that the scope of the project is accurately outlined
• Ask questions if there is anything you don’t understand
• When you are satisfied that you understand the contract, you can move on to the next step.

Reviewing the Contract Terms

• Carefully review all of the contract terms, including the scope of the project, timeline, payment schedule, and any other conditions that must be met
• Check that the contract includes any guarantees or warranties and that they are clearly stated
• Make sure that the contract includes a dispute resolution process in case of disagreement
• Ensure that all parties have agreed to and signed the contract
• Once you have reviewed all of the contract terms and confirmed that everyone has agreed to them, you can check this off your list and move on to the next step.

Identifying Potential Risks

• Identify any potential risks that may arise from the terms of the agreement
• Consider any potential changes in the construction project, such as budget increase, timeline extension, and scope changes
• Look out for clauses that may affect your rights and responsibilities, such as indemnity and dispute resolution clauses
• Check that the agreement includes liability insurance and performance bonds
• Ask questions and seek clarification on any clauses that you are unsure of
• When you are confident that you understand the terms and that you have identified any potential risks, you can move on to reviewing the contract terms.

Negotiating the Contract Terms

• Ensure the contract includes a clear scope of work, timeline, and payment schedules
• Make sure the contract includes any details agreed upon in negotiations, such as the types of materials to be used
• Check that the contract includes language that protects you from potential risks
• Have a lawyer review the contract for accuracy and to ensure it meets all legal requirements
• Once satisfied with the terms of the contract, sign the agreement and keep a copy for your records
• You can check this step off your list when the contract is finalized and signed by both parties.

Understanding Liability Waivers

• Read through the agreement to see if it includes any liability waivers
• Pay close attention to the wording, especially of any waivers that may limit your rights
• Ask questions and make sure you understand the meaning of any waivers in the agreement
• Make sure that any waivers are legally enforceable and that they are limited to specific circumstances
• Cross-check any waivers against any state or local laws that may prohibit such waivers
• When you are satisfied that any waivers are legally acceptable, you can check this off your list and move on to the next step.

Obtaining Necessary Approvals

• Check with local government regulations to ensure the construction project meets all regulations, including zoning and building codes
• Obtain any necessary permits and licenses
• If the construction project requires inspections, be sure to schedule them in advance
• Make sure any subcontractors involved have the necessary certifications and insurance
• Ensure that you have the required approvals from other stakeholders, such as homeowners associations or local businesses

You’ll know that you have completed this step when you have all necessary approvals in place, and all documents needed for the permits and licenses have been submitted.

Completing the Contract

• Read over the final, signed contract carefully to ensure all details and specifications are accurate
• Make sure all signatures are in place
• Make sure all dates are accurate, including start and end dates
• Make sure all payment terms are clearly outlined
• Make sure all parties have a copy of the signed contract
• Check for any additional paperwork required for the project
• Confirm that all contract terms have been met

Once you have confirmed all the details of the contract, you can check this off your list and move on to the next step of establishing project documentation.

Establishing Project Documentation

• Obtain a copy of the complete set of construction drawings, specifications, and other documents that define the project requirements
• Make sure the documents are signed and approved by the owner, architect, contractor, and other relevant parties
• Confirm that the documents are complete and accurate
• Review the documents to ensure that all necessary information is included
• Note any discrepancies between the documents and contract
• Ask questions to clarify any discrepancies
• Once all of the project documentation is established, the agreement can be signed and the project can move forward.

Setting Timelines and Deadlines

• Determine the timeline for the project and set deadlines for each task
• Discuss the timeline with the contractor and make sure that everyone is in agreement
• Ask for a signed contract that includes the timeline and deadlines for each task
• Discuss with the contractor any potential issues that could arise from the timeline and come up with solutions
• Make sure that the timeline is realistic and takes into account any delays that may occur
• Have an agreed-upon penalty for any missed deadlines
• Keep a copy of the timeline in your records for future reference
• Check off this step on your list once you have an agreed-upon timeline and deadlines for each task.

Managing the Project

• Make sure the construction agreement includes the scope of work to be completed, including the materials and labor needed.
• Ensure that the contractor has the necessary qualifications and experience to complete the project.
• Make sure the contractor has the necessary permits and licenses for the work outlined in the agreement.
• Confirm that the agreement includes a payment schedule, and that you are aware of any additional fees that may be incurred.
• Make sure that the contractor is insured and bonded, and that you are aware of any liabilities that may arise.
• Determine whether the contractor will be responsible for any subcontractors needed for the project.
• Verify that the contractor will provide a warranty for the work completed.

How you’ll know when you can check this off your list and move on to the next step:
Once you have verified all of the points listed above, you can move on to the next step in the process.

FAQ:

Q: Is the contract enforceable in the jurisdiction in which it is being signed?

Asked by Anna on March 9th, 2022.
A: Yes, the contract should be enforceable in the jurisdiction in which it is being signed, provided that all parties are legally competent to enter into a binding agreement. It is important to ensure that all parties understand their obligations under the contract and are aware of any legal implications of signing. It is also important to check that any laws or regulations applicable to the contract are being followed. Furthermore, it is recommended to have the contract reviewed by a lawyer in the relevant jurisdiction before signing.

Q: What are the differences between UK and US construction agreements?

Asked by Emma on April 17th, 2022.
A: Construction agreements vary between countries due to differences in laws and regulations. In the UK, construction agreements typically include more specific terms and conditions than in the US, as well as additional clauses concerning dispute resolution, health and safety regulations, property rights, and other relevant matters. In the US, construction agreements tend to be more broadly-written and often include limited liability clauses. Additionally, US construction agreements generally have fewer provisions regarding dispute resolution and property rights than those found in UK contracts.

Q: What should I consider when signing a construction agreement for a technology company?

Asked by David on May 28th, 2022.
A: When signing a construction agreement for a technology company, it is important to consider the specific needs of the project. The agreement should cover all aspects of the project including scope of work, cost breakdowns, payment schedules, timelines for completion of tasks, intellectual property rights, warranties and indemnifications. Additionally, it is advisable to include clauses that define how disputes will be resolved and how changes can be made to the agreement if necessary. It is also important to ensure that any legal requirements for technology projects in the jurisdiction where it is being signed are met.

Q: What sort of liabilities might I face if I sign a construction agreement?

Asked by Sarah on June 13th, 2022.
A: Depending on the terms of the agreement and applicable laws and regulations, signing a construction agreement may expose you to various types of liabilities. These may include financial liabilities such as cost overruns or delays due to unforeseen events; potential damages resulting from errors or omissions; liabilities related to health and safety or environmental regulations; or contractual liabilities resulting from breach of contract or non-compliance with terms of an agreement. It is important to carefully review any construction agreement before signing to ensure that all liabilities have been addressed and that all parties understand their obligations under the agreement.

Q: How can I make sure my construction agreement is legally binding?

Asked by Michael on July 5th, 2022.
A: For a construction agreement to be legally binding, all parties must be legally competent and must agree upon its terms and conditions with an intention to create legal relations between them. The agreement should also include all essential elements such as offer and acceptance; consideration; intention to create legal relations; certainty; capacity; legality; performance; and sufficient consideration for each party’s obligations under the contract. Additionally, for certain types of contracts such as those involving minors or those with mental disabilities, additional steps may need to be taken to ensure that they meet legal requirements and are binding on all parties involved.

Q: What should I do if there are changes needed after I sign a construction agreement?

Asked by John on August 22nd, 2022.
A: If changes need to be made after signing a construction agreement, it is important to first refer back to the contract itself for any provisions regarding modifications or amendments. If there are no explicit provisions in place for making changes after signing then it may be necessary to draft an amendment which must be agreed upon by all parties before it can become legally binding on them. Additionally, depending on the nature of any changes made it may also be necessary to seek approval from relevant authorities or comply with any applicable laws or regulations before making any changes.

Example dispute

Suing a Construction Company

• An individual or company may sue a construction company for breach of contract if the company failed to fulfill the obligations outlined in a construction agreement.
• The plaintiff can provide evidence such as the contract, emails, text messages, photos, and any other relevant documents to prove that the contract was not fulfilled.
• The plaintiff can also provide evidence to show that they suffered economic losses due to the breach of contract.
• The court will consider the evidence provided by both sides and may award damages to the plaintiff if it finds that the construction company breached the contract.
• These damages may include monetary compensation for lost wages and other costs associated with the breach of contract.
• The court may also require the construction company to fulfill its obligations under the contract.
• If the court finds that the construction company acted in bad faith or recklessly, it may also award punitive damages to the plaintiff.

Templates available (free to use)

National Construction Agreement

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