Why Construction Contracts Are Important

Arturo from GT shares with us in our recent blog conversation that it is always important to sign a written contract when entering any kind of business transaction. The same applies to construction projects, which are usually quite complex and time-sensitive. A construction contract is a written statement that clearly outlines the obligations and expectations of the parties involved as well as how they will share the risks from the start to the completion of the project. There are many reasons why construction contracts are important.

Sets the Terms of the Contract 

Without a written statement, the expectations and interests of the parties may change over time, resulting in disputes. A construction contract ensures that the terms for the project including the responsibilities and obligations of each party are set and agreed upon before the start. It also outlines how any potential risks will be handled during the project. 

Construction contracts set out the terms of the project to avoid any elements of dishonesty along the way. It gives a clear road map on the roles that each party will play and how the project will smoothly run from start to completion. That also eliminates any assumptions that could jeopardize the project. 

Legal Provisions for Default 

Construction contracts are legally binding documents that all the parties involved must honor. Although both parties agree to the terms of the contract, one party, especially builders may fail to deliver. On the other hand, the owner of the project may also fail to pay. Many other disputes could still arise in the course of the project. 

The benefit of a construction contract is that it also offers provisions for default to cushion both parties from unnecessary losses. That means you can file a claim to seek a legal settlement in case one of the parties fail to honor the terms of the contract. 

Regardless of the size or duration of your construction project, you should always sign a written construction contract. Consult a legal professional for help with obtaining a construction contract when planning a construction project.