Management

Contract Basics

Aug. 1, 2005
3 min read

Sidebars:
The List
Contract Dos
Find and Use a Good Lawyer

"In today's climate, it is extremely important to have relationships with professionals in place before you need their services," says Paul Winans, CR, president of Winans Construction Inc. in Oakland, Calif. "You don't want to have a problem with a client that forces you to meet a lawyer for the first time."

Most of your jobs are probably the result of a referral. Winans recommends using the same technique to find a lawyer who understands construction-specific concerns and can address your full range of legal needs.

"Ask other contractors for referrals," he says. "Find out who's working well with other contractors. Then go out to lunch, ask them questions, how they handled this or that, and get clear about billing rates, issues and costs."

Once you choose a lawyer, Winans suggests having him or her remodel your contract as a first order of business.
 

The List

7 Contract Options that Should Be Included

According to Paul Winans, every construction contract should address the following issues, whether required by law or not:

  • How additional work and change orders will be handled
  • Dispute resolution
  • Acceptable causes of delay
  • Acceptable situations where either party can stop work
  • Unforeseen conditions
  • Allowances
  • Insurance

Contract Dos

  • Do understand your state's requirements. Each state has required contract clauses. "As the contractor, you have to be all-knowing; it is 100 percent your responsibility to make sure the contract is in compliance," says Winans. "If it's not, you have no case: Go home, you lose. It's a sad thing."
  • Do include a change order provision and copy of the form in the contract, says attorney Bryant H. Byrnes of the Law Offices of Bryant H. Byrnes, Oakland, Calif. Don't forget to get signatures. When change orders aren't signed, remodelers eat the cost.
  • Do add a "prevailing parties and attorney fees clause," says Byrnes. If your client takes you to court, he explains, the clause ensures that "you win not only the damages, but also the attorney's fees and costs back. That adds teeth to the enforcement."
  • Do provide a clause clarifying dispute resolution. "If you go ahead and take the time to talk about how you're going to handle problems before the job starts, it's less likely that problems will arise after the job starts," says Winans.
  • Do include a clause allowing for the unknown and clarify what will happen. "We get clear about the impact of what you can't see once it becomes visible," says Winans. "Talk about it because those are the types of things that can really irritate a client when they're brought up as they are discovered."

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