4 Common Construction Contract Mistakes to Avoid
Every year, hundreds of thousands of construction contracts are signed all over Australia. When doing a construction project of any kind, having a construction contract is highly important. Not having a contract or having a poorly written contract with different types of mistakes can cost you a lot.
A contract between a client and contractor gives both parties control over the project. If you have a good contract, you avoid problems such as delayed payments, poor quality workmanship, delayed or unfinished builds and so much more.
Here are 4 common pitfalls that you should avoid when creating a construction contract...
1. Leaving out important clauses
Contracts and paperwork no matter how much of a drag they are can help protect both the client and contractor. However, it often happens that people forget to include important clauses that can protect all parties involved.
Three clauses can be crucial in protecting both the client and contractor and you should never leave them out of your contract. Those three include stop of work clause, stop payment clause, and an act of God clause.
Hiring a construction lawyer can be of great help when making construction contracts. Construction lawyers from Sydney know exactly how to make a contract without leaving out important clauses. You may spend a bit more on a lawyer but at least you can rest assured that everyone involved is legally protected.
2. Lack of insurance
It often happens that the contracts lack one of the most important elements – insurance. As a client, if you forget to include the proper insurance in the contract you risk losing a lot of money on court proceedings and other legal fees that come with it.
This is once again where a construction lawyer can be of great help. They would remind you to put important insurances in place, insurances such as public liability insurance, employer’s liability, and developer insolvency insurance.
Public liability insurance protects you in case of a work injury, or property damage. Not having employer’s liability insurance is punishable by law and it is there in case someone gets injured on the job. The last one, developer insolvency insurance will protect you as a client in case the contractor goes broke.
3. Payment plans
A client should never pay the contractor upfront without seeing results. If you pay before seeing results, you risk a lot of things. For example, your contractor can run out of money, declare bankruptcy or leave the project without finishing it.
If you hire a good contractor, they won’t have any problems receiving payment later because they have enough capital to fund the construction. You should agree to pay (a small amount of money) only when you see certain construction advancements.
To make sure that everything is done correctly, consult with an architect before making the payment. This is another way to make sure that everything is up to standards and it’s a good way to encourage the contractor to keep up the good work and to stick to a schedule.
4. Don’t forget to include timings
Another common mistake is forgetting to include expected timings in the contract. And this doesn’t just include when the project should be finished, but day to day timings of the project as well.
It’s important to include how many hours the builders are expected to work and when certain elements of the build should be done. It’s crucial to count in possible delays since they are sometimes unavoidable. However, you need to have in writing how your contractor plans to avoid delays and if they happen what safeguards are there.
A good contract will include every construction detail no matter how small or insignificant it may seem. If you don’t know how to make sure that your contact is good enough and that there are no mistakes in it, don’t hesitate to hire a construction lawyer.