What is a construction contract and who needs one?
A construction contract, sometimes referred to as a contractor agreement, is a legal contract created between a contractor providing construction services and the owner of the project. The contract could be between a homeowner, business owner, or a construction management company in charge of new construction work and the general contractor who is responsible for planning and carrying out the project. Or it could be between a general contractor and an independent contractor or subcontractor.
Whether it’s a simple home improvement contract or an enterprise-level business contract, this type of document is crucial in the construction industry and outlines all the details of the project to avoid conflict and confusion. It should make everything about the project clear, including pricing, payment terms, timeline, consequences for breach of contract, any necessary subcontracts, logistics for carrying out the work, and other important information.
When to use a construction contract.
Use a construction contract anytime you hire someone to conduct a construction job or anytime you’re hired by someone else to do construction work. Even when you work with friends or family, it’s a good idea to create a contract to make sure everyone gets a fair deal and is aligned on what the work will entail. Should there be any disagreements later that require arbitration, having a contract will be critical for dispute resolution.
