There comes a time when you need to renovate, remodel or build a housing structure. When that time comes, you may need to hire the services of a general contractor who would be responsible for getting the renovation, remodeling, or construction project done.
You can secure the services of a general contractor with the use of a construction contract agreement. We explain what this contract is below and how our construction contract agreement template can help you in this regard.
What is a construction contract?
If you are a client interested in renovating, remodeling, or constructing a building structure, you will need to hire the expert services of a general contractor.
The legally binding agreement that defines the scope of work, payment details, and the general contractor's rights in subcontracting part or all of the construction work is stated in a document known as a construction contract.
In addition, a construction contract agreement with a general contractor will indicate the details of the construction work. Also, all plans or work orders are attached to the contract, local government agency work permits, and other information.
When do you need a construction contract?
A construction contract should be used before starting any building construction process. This may involve the remodeling or renovation of an existing property. It may also involve the structural construction of a new building.
You need a construction contract agreement when you intend to hire a licensed professional general contractor to supervise the completion of your construction project.
Best practices for construction contracts
A typical construction agreement template should consist of the following information:
- The Client: This is the project owner and the person who hires a professional general contractor to help with the work.
- The General Contractor: This is the hired professional responsible for the daily supervision of the construction project.
- General Contractor's License Number: The general contractor must be licensed. Their state license board number must be provided as proof of their competence.
- The Worksite: This is the location or the address where the construction work will occur.
- Work Description: Details of the required construction work is stated for clarity. The project plans and other specifications can be attached to the construction contract.
- Contract Fee and Payment Schedule: The construction contract will have the total agreed fee to be paid to the general contractor as well as the payment schedule.
- Construction Contract Documentation: The contract will contain construction blueprints, drawings, and relevant documents.
- Labor and Material Cost: The construction contract indicates the party responsible for supplying the necessary work materials and paying for labor.
- Permits and Licensing: The construction contract states the party responsible for acquiring relevant permits and licenses.
- Subcontracts Information: The contract states whether or not the general contractor will deploy the services of subcontractors in aiding with the completion of the project, which is the principal obligation of the general contractor.
- Project Commencement and Completion Dates: The contract states the date the project will commence as well as the expected completion date.
- Management of Changes to Scope of Work: It is possible that there may be changes to the scope of work. It is therefore important for the contract to indicate how such changes will be managed during the course of the project.
- Warranties: The general contractor has to provide warranties for the work done. For example, the general contractor must provide a warranty for the materials used in completing the project.
Your construction contract agreement can also include other equally important elements, such as;
- Inspection: The construction project owner can inspect the project at any point during the course of work to ensure that the general contractor is adhering to agreed specifications.
- Insurance: All parties to the project should have insurance against defects, damages, losses, and claims.
- Indemnification: The general contractor bears the financial responsibility for damages or losses encountered during the course of the project.
- Resolution of Disputes: The contract indicates how disputes between the client and general contractor will be resolved. These ways include adjudication, arbitration, and mediation.
- Force Majeure: This informs all parties to the project that they would not be responsible for any inactivity or delay in completion due to unforeseen circumstances, such as; an act of nature, changes in the contract plans, and a shortage of construction materials.
- Liquidated Damages: The contract also states the amount of money that the general contractor has to pay the owner daily for each day the project extends beyond the agreed completion date.
- Material Storage and Waste Dumping Information: The contract can indicate the location where all incoming materials will be stored and where all wastages will be dumped.
- Contract Termination: The terms and conditions for the termination of the construction contract agreement are stated.
Q1: Can anyone use your construction contract template?
A1: Yes. If you are the construction project owner, you can use our construction contract agreement template.
Q2: Can I use this construction contract template for a remodeling project?
Q2: Yes. You can use our construction contract agreement template for your remodeling project.
Q3: Is this template free to use?
A3: Yes. Our construction contract template is free-to-use. You can download it now in editable PDF format.
Q4: Can your construction agreement template be edited?
A4: Yes. Our FREE construction agreement template is available in an editable PDF document. We appreciate the fact that the requirements for construction contracts may differ from person to person.
To this end, our template can be edited to suit your respective needs. However, we advise that you seek legal counsel before making any amendments to ensure that it adheres to the local law in your area.