3 Essential Things to Have In Your General Contractor Contract
Conditions are the terms and obligations binding on the parties to a contract. In a contract for a project, the General Contractor must ensure that it contains is the following 3 conditions:
- Work and Duties of the Parties
Under this condition, the scope of the work to be done will be fully disclosed. In addition, the warranties and assurances provided by both the contractor and the client will be highlighted. Also the condition of the sites and other insurance details will also be provided.
This condition also indicates the party responsible for the obtaining of licenses and permits among others. This is the most basic condition of the contract, as it goes to the essence of the whole contract.
- Timeline and Payment Schedule
Also important is the condition detailing the Timeline and Payment Schedule of the whole contract. This condition is particularly important to ensure convenience and proper planning. In this section, the timeframe for the completion of the project will be stated. This includes the:
- commencement date and the proposed date for completion;
- various milestones and completion levels are included in the contract
- process of handling delays and extensions in the completion of the project will also be indicated.
This section also outlines the payment plans for the project; whether there is installment payment, or payment according to the milestone or even a lump sum payment. And it outlines the steps to be taken in the case of payment defaults especially from the client.
- Dispute Resolution Clause
Another condition that must be included by a general contractor in a contract is the Dispute Resolution Clause. Considering the frequency at which disputes arise in this kind of transaction, the success of the job is largely determined by the efficiency of the dispute resolution mechanisms put in place.
The contractor and client have to agree on effective and practical means of resolving the different kind of disputes that may arise. The process for addressing delays and extensions should be provided. The means of addressing defaults in payments should also be included. These means could range from:
- Contractor and Client In-house Negotiations,
- Mediations and Arbitration
- Full-blown Litigations
The Cost of Damages
Putting in mind the nature of these transactions, it is advisable to explore other means of dispute resolution, particularly Arbitration before recourse is made to the courts for Litigation. However, litigation can and does happen more often than you may expect.
In the unfortunate case where you are held responsible for damages you would be required to cover the entire cost of the injuries and potential legal defenses. This is when you will be relieved to have Contractors Liability Insurance in place. You don’t?
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