5 Construction Contract Clauses for Your Next Building Project
Doing great work with your hands? No problem. You’re a pro.
Drafting a contract that allows you to do that great work while protecting your interests? That’s a whole lot trickier.
If you haven’t taken a good look at your standard contract in a while, now is the perfect time to give it a good once-over — before work heats up in the spring. In particular, make sure you have these five clauses spelled out in your contracts to protect you from the rare — but potentially devastating — problem client.
1. The Right to Stop Work for Nonpayment
Contrary to popular belief, you can’t necessarily stop construction over a late or missing payment. To protect yourself from losing money and being on the hook for completing a job without payment, be sure to add a clause that indicates how long you’ll wait for payment before stopping work. This will cover you and give you some more leverage to request payment in a timely manner.
2. The Right to Recoup Attorney’s Fees
If you do find yourself in a situation where nonpayment has escalated, you may have to take your client to court to get your money. That’s a last resort, of course, but it’s good to be prepared. Be sure to add a clause stating that you have the right to recoup your attorney’s fees for any legal action you end up taking. If you leave this out, you’ll be out of luck — and taking your client to court may become too expensive to be worthwhile.
3. The Right to Terminate for Convenience
Sometimes, no matter what you do, a project isn’t going to work out. This clause gives you an out if your working relationship with the client deteriorates or you can’t see eye to eye on the details of the project. A right to terminate clause will help you get out of a bad situation, and it generally offers your client the same freedom. Though it can sound a little scary to leave open the possibility of getting kicked off the job — which is vanishingly rare! — you’ll be glad for the freedom when you need it.
4. The Right to Hire Subcontractors
Your clients may or may not understand the ins and outs of what it takes to build a house, and they may balk at the idea of using subcontractors to complete the work. In an ideal world, you’d be able to talk them through the reasons why you sub jobs out and allay their fears about the quality of work. Still, this clause spells out that you can hire subcontractors at will, and it will protect you from unfounded complaints about doing so. Even if you don’t plan to use subs, it’s good to have this in place — you never know what will come up on a job or how you’ll have to take care of it.
5. The Right to Change Orders
Also in the category of “things come up” are change order clauses. Your clients will certainly want changes, but make sure that your contract also specifies a change order procedure when you need to alter something on the project. This could be as simple as discovering that a door is out of stock, or it could be a complicated change to the design or specified materials. Good communication solves most problems, but it’s always good to have a back-up plan in writing so everyone knows what to expect.
Construction contract clauses can work for you — if you know what to look for. Add a contract review to your to-do list this year to make sure you’re up to date and ready to roll.