When you get a construction contract written up, it is imperative that you get help from a competent lawyer. But, to get started with your contract document, you can also enlist the services of agencies like trade services Melbourne, building and construction Melbourne etc. so that the various terms of the contract become more familiar to you. The contract that is finally drawn up should be clear and also fair to all the stakeholders while adequately protecting you and the best interests for you.
Following are among the essential elements that should be enshrined in your contract.
Signature of all parties to the contract, with full name, addresses and contact information.
Although this may look pretty obvious, it is an element that is often overlooked in trade services Melbourne or building construction Melbourne contracts and is essential to give the legal standing to the contract. In the absence of appropriate signatures and connected information on the contract, it could become difficult to hold up the contract in a court of law.
Table of Contents
Scope Of Work
Scope of work is generally included in nearly every construction contract, in many cases, the details are overlooked. Scope of work in a contract should be as extensive as possible, explaining each service expected of the contractor, including detailed specification of materials, grade, quality, schedule of work, and other specifications that are pertinent to the proper construction of the facility. There is no harm adding even the smallest detail like the quality of sand to be used, ratio of concrete, quality and specification of steel employed, structural details, painting process and connected details etc. The contractor should also undertake a soil testing to ensure the stability of the chosen site and determine the need for any additional measures to ensure that the foundation can take the load when the building is completed and fully occupied.
Payment Terms/Project Cost
Take special care to ensure that the project cost and all payment terms are clearly defined. Contract payments are always graded and related to the completion of each phase of the project. Leave no room for confusion and all interim bills raised should stay within the scope of the contract. Draw out a schedule of payments clearly defining the payment against completion of each item of work and the date on which such payment is due. In some instances, payments may fall due only after a specified time has elapsed since completion of the phase of work. For instance, when a roof concrete is laid, it takes about 3 to 4 weeks of curing before the concrete sets and further progress in construction can be made. Any flaws with the casting of the concrete may emerge only after the interval of a few weeks. Think of similar possibilities and include it in the contract.
Schedule Of Work
If the schedule of work needs to be exhaustive, you can qualify it as an annexure and fill several pages for the various details. There should be a clear start date for the project, the completion date of the overall project, stages of completion and the time frame for achieving those stages, a clear definition of calendar days and work days, responsibility for obtaining various approvals, easements and permits and how it affects the project financially as well as in terms of time.
Escalation Clause
Cost escalation is a perennial thorn in large projects running into several years. Inputs costs can escalate for various reasons during the execution and the contractor cannot always be responsible for such escalation. Therefore, the contract should clearly stipulate the percentage of escalation and the conditions to be fulfilled to qualify for the escalation. Similar to the escalation, your contract should also have a well-drafted force majeure clause particularly focused on items that will not attract the force majeure provisions. Remember that these two provisions can significantly alter the overall cost of your project if adequate safeguards are not built into the contract.
Authority
In building construction Melbourne contracts, there are several moving parts and therefore it can be difficult when authority for making decisions need to be defined. Therefore, the contract document should clearly define such authority so that it is legally binding throughout the tenure of the contract. This simple measure can save you significant room for confusion and conflicts during project execution. Enlisting appropriate legal services to design and construct the contract is another essential measure to ensure smooth execution of the contract.
Weather
Weather can play spoil sport in nearly every construction contract. Some events related to weather can be anticipated and factored into the contract. But, what about those events that come unannounced and cause havoc midway through the project. The contractor can suffer serious damages and financial loss. How does the contract provide for such losses and what share of the losses accrue to the project owner are areas that should be stated unequivocally in the contract so that the burden of force majeure events are shared by the contractor and the project owner in an agreed ratio. If this possibility is discussed in advance and the required modality of treatment is arrived at in advance, you can save significant time negotiating with the contractor to arrive at an amicable settlement.
Understand Your Risks
Every project has its share of risks and understanding these risks can make the perfect contract and enable successful completion of the project without the attendant hurdles. Every business should weigh the risks before making an investment and weigh the pros and cons in the light of the perceived risks. When the risk-benefit analysis does not tilt in your favour, it may be desirable not to commence the project and invite an avoidable loss.
Conclusion
Every contract should be legally enforceable and drafted with an essential covenant to keep the interests of both parties fully protected. For instance, the contractor should be eligible for compensation if there is a significant rise in input costs. Similarly, the project owner should not be burdened on account of avoidable delays caused by the contractor. A legal professional can help you draft a contract that is balanced and viable for both parties.