Construction Lawyer & Building Solicitors Sydney | Contracts Specialist Law Firm

Builders: What Are the Most Important Clauses in Construction Contracts?

Using the right clauses in a contract is a big deal. More often, these statements can prevent you from conflicts and disputes.

Save your construction business from complicated and costly disputes with homeowners. Contracts Specialist can help you by drafting the precise construction contract you need.

What is a Contract Clause?

A contract clause is a specific provision or segment within any kinds of contracts. It is a section that addresses a particular condition or aspect that relates to the overall subject matter of the agreement. Each clause is used to define clearly the responsibilities, rights, and privileges of both contractual parties.

Basically, a contract clause is a set of terms that can be found in various parts of a construction contract. This is an important part of any agreement, especially for building and construction matters.

“Before you use and sign a construction contract, we recommend you to know the common contract clauses and how these might affect your legal rights.”

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Construction: What are the Common Contract Clauses?

Just to be clear, contract clauses are used depending on the needs of the contractual parties. The common contract clauses can, of course, be found in most standard contracts.

Choice of Law Clause

This type of clause implies that parties agree that the contract terms will only be interpreted according to the laws of a specific state.

The Statute of Limitations Clause

This clause sets the time frame in which a lawsuit can be filed after a breach of contract or other violation.

 

Time of Performance Clause

This indicates the time frame in which the contract duties can or cannot be performed. In addition, if the other party failed to do so in a reasonable amount of time, it means they breach the contract and a lawsuit can be filed.

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The Essential Construction Contract Clauses

You can sign a contract within 5 seconds but this is different from drafting one. Writing a construction contract is not as easy as 123- it requires to be drafted meticulously and precisely. And you should not forget including the following essential contract clauses:

Termination Clause

This details the situations under which the parties may end their legal relationship and discontinue their obligations under the agreement. The law allows the parties to terminate the agreement by mutual consent if one has breached the contract.

Adding termination clauses in your construction contract is necessary. This can let you escape from a homeowner who is not paying you at the right time and in the exact amount.

The clause may expand or limit the common law right to terminate and may contain the following termination events, which may be mutual or unilateral, and optionally include a right to cure.

Payment Clause

This one surely is the best part for builder’s perspective but crucial too. The payment terms and schedule can be a bit sensitive issue for the contractual parties. Most building disputes are caused by disagreements with payment.

However, the Security of Payment Act can always help contractors, builders, and subcontractors by protecting their legal rights to payment.

The payment clauses are the first thing to take consider of. So you better add a payment term section in your contract if you want to prevent any conflicts to happen.

 

Dispute Resolution Clause

The dispute resolution methods are needed whenever each party found themselves stuck in a conflict or issue. We have many methods to resolve a dispute such as meditation, arbitration, adjudication, and litigation.

Incorporating dispute resolution clauses are essential parts of your construction contract so it should be well-drafted and clear. There is a 90% chance of you getting into a dispute within a project so you should better be prepared when this happens.

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Key Contract Provisions in a Construction

Contracts are undeniably long and detailed but you should read the following clauses twice because it is risky if you let these pass.


No Damage for Delay Clause. Each builder must always carefully examine the contract documents to know if there is a no damage delay clause within the contract terms. This provision implies that whilst the contractor or subbie is not entitled to a claim for delay damages, it will be entitled to an extension of time.

Contractors Review of Documents. Homeowners often seek to add exculpatory clause (exculpat means “freed from blame”) in contracts to put the blame onto contractors or subcontractors when defects in the plan occur.

Indemnity Clause. This is a common element of contracts. It is used to shift potential costs from one party to another. An indemnity clause states that one party agrees to “indemnify” (and often also to “hold harmless” and “defend”) the other party.

How Contracts Specialist Can Help?

We are called Contracts Specialist for nothing. Our expert lawyer, John Dela Cruz, can help you with drafting, reviewing and terminating your construction contracts.

Our specialist construction law firm only works on Sydney construction law matters. We have over 10 years of experience and have worked on various types of cases. You can be confident that your legal rights will be enforced.

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