Construction Contracts
What is a contraction contract?
A construction contract is a legally binding agreement between two or more parties, where one party, typically referred to as the “contractor”, agrees to provide construction services, which can include labour, materials and equipment, for the other party.
Need help preparing a construction contract? Reach out to Inkling’s experienced team today.
-
There are different types of construction contracts, each tailored to different types of projects or client needs. Here are a few of the most common ones:
Lump Sum or Fixed Price Contract: the contractor agrees to complete the project for a fixed price. This type of contract is suitable when the project scope is well-defined and changes are unlikely.
Cost Plus Contract: the contractor is reimbursed for the project’s allowable or actual costs. A fee, which can be a fixed amount or a percentage of the cost, is added to the cost, is added to cover the contractor’s overhead and profit.
Time and Material Contract: the owner agrees to pay the contractor based on the time spent by the contractor’s employees and for the materials used in the construction, with an added markup for overhead and profit.
Unit Price Contract: this type of contract is based on the individual units of work. The contractor is paid a specified amount for each unit of work completed.
Design-Build Contract: the contractor is responsible for both the design and construction of the project, providing a single point of responsibility to the owner.
Guaranteed Maximum Price (GMP) Contract: this is a type of cost-plus contract where the contractor is compensated for actual costs incurred plus a fixed fee, but there’s a maximum price set for the project. If the actual cost exceeds this maximum, the contractor has to bear the extra costs.
The specifics of each construction contract are dependent on the project and client and are typically detailed in the written agreement.
-
Although you are not legally required to have a lawyer to enter into a construction contract, seeking legal advice is highly recommended to ensure you fully understand your rights, obligations and risks. Having a lawyer assist in preparing a construction contract can be very beneficial for several reasons:
Complexity: a lawyer can help you interpret and explain complex legal jargon often contained in construction contracts.
Protecting your interests: a lawyer can ensure that the contract is fair and protects your rights and interests.
Risk management: a lawyer can help identify potential risks and liabilities in the contract and suggest ways to mitigate them.
Negotiation: a lawyer can be invaluable in discussions to negotiate more favourable terms.
Ensuring Compliance: construction law is complex and often involves various regulations, permits and legal requirements. A lawyer can help ensure that the contract complies with all relevant laws.
-
We are experts in construction law. Our experienced team will ensure your construction contracts are comprehensive, legally compliant, and contain the most favourable terms possible.
It is important you are aware of your rights, obligations, and risks under your construction contract. We can assist in preparing a construction contract that fosters trust and transparency. Contact us today!