Top 10 Clauses To Include in a Tennessee Construction Contract
A construction contract is a crucial document in construction and the construction management process. A well-drafted construction work agreement is the key to the success of any building project. A legally binding construction contract contains several provisions and clauses aimed at protecting the involved parties, including contractors, property owners, and subcontractors. It protects parties by clearly outlining responsibilities, expectations, and remedies in case of disputes.
Ensuring construction contracts are thorough and tailored to state-specific regulations is crucial. Below are the top 10 clauses to include in a construction contract;
- Scope of Work
This clause explains the work to be performed by the contractor or subcontractor. It provides direction for the building project, including timeline, drawings and blueprints, materials to be used, and services to be provided. This clause should be as detailed as possible to avoid misunderstandings or disputes.
- Timeline and Deadlines
All construction clauses should include a clause outlining the project timeline and deadlines for completing specific tasks. This clause helps ensure the project is completed on time and within budget.
- Payment Terms
This clause defines the payment terms, including the amount to be paid, payment schedules, conditions to be met before payment is made, and consequences of late payments. It also explains the situations that warrant the owner withholding or delaying payment to the contractor, such as due to defective or unacceptable work.
- Change Orders
This provision governs changes to prices, scope of work, schedules, and other things during construction. Change of orders spell out the process for providing notice, requesting modifications, and approving change orders.
- Dispute Resolution
A dispute resolution clause is vital in a construction contract. This clause outlines how a dispute will be handled – whether through alternative dispute resolution (ADR) or litigation. If a dispute arises, parties are required to follow the contract dispute resolution procedures.
Before settling on a dispute resolution method, parties should carefully weigh the pros and cons of all methods.
- Suspension or Termination Clause
This clause outlines the parties’ rights and obligations and the conditions for suspending or ending the contract. For instance, parties can terminate a construction project in several ways, including termination for cause (non-payment, breach of contract, etc.) and termination for convenience (usually the employer/owner).
- Warranties and Guarantees
This clause includes any warranties and guarantees on labor and materials and their durations. This clause should mention any conditions that must be met before a person can make a claim.
- Force Majeure
The “force majeure” provision, also called “Act of God,” details the parties’ rights and obligations in the event of an extraordinary event, such as a natural disaster that delays project completion. Usually, this clause justifies a party’s failure to complete their responsibilities under specific provisions.
- Insurance
To manage risk, a construction contract should include a clause requiring appropriate insurance such as workers’ compensation, general liability, and property insurance.
- Limitations and Waivers of Liability
A construction contract can contain a provision limiting the damages or remedies parties can recover. Additionally, it may contain a waiver or release of liability, which means one party agrees not to hold another party liable for damages.
Contact a Knoxville Construction Law Attorney
To ensure a well-written construction contract and that your rights are protected in the contract before you sign, contact our Knoxville construction law attorney at Reynolds, Atkins, Brezina & Steward, PLLC.
