While it has been said that the pen is mightier than the sword, all too often contractors and consumers alike find out that the keyboard is mightier than the hammer.
In the same way that The Three Little Pigs built houses varying in structural integrity, construction contracts also vary in quality. And just like the Big Bad Wolf came to blow their houses down, problems can arise in construction projects with the potential to cause unwanted harm. While it may be tempting to save time or money, a DIY or generic contract can you leave you out in the cold when the wolf comes knocking, just like the pigs who built their homes out of straw and sticks. But like the pig who invested in a home built out of bricks, a construction contract drafted by a real estate attorney, tailored to your specific project, should keep you warm and cozy if that Big Bad Wolf comes huffing and puffing.
Whether you are a contractor or a property owner looking to hire a contractor for a project you have in mind, a thorough and well-drafted construction contract can help prevent unnecessary frustrations, disputes, and costly litigation.
A recent report by the American Bar Association, highlighted three important areas where many construction contracts tend to open the door to costly disputes.
- Third-Party and Force Majeure Events
Third-party or force majeure events occur when one party is unable to perform their obligations under the contract due to circumstances out of their control.
From pandemics, to natural disasters, and even the death of a supervisor, a force majeure clause in a contract provides the parties with instructions on how to handle delays in performance caused by third-party and force majeure events. A well drafted force majeure clause will specify what type of events fit within the clause and the what qualifies as falling outside of the control of a party.
For instance, a good force majeure clause would protect a contractor from delays cause by labor disturbances while protecting the consumer by requiring that the contractor had no responsibility in causing the labor disturbances if the contractor seeks protection from delay by claiming force majeure.
- Errors and/or Omissions
Though architects and engineers would like to believe otherwise, errors and omissions are a common occurrence in construction documents. An error or omission can occur if an architect draws up plans that leave out construction features that were intended to be included or the plans misstate dimensions for a given construction feature.
An errors and omissions clause in a construction contract instructs the parties how any errors and/or omissions will be handled.
For example, a homeowner looking to add-on a bedroom to their house may request to have exterior lights installed in various locations along the new exterior wall that will be constructed. However, if the architect forgets to add those lights into the plans, the homeowner and contractor can easily become embroiled in a dispute about how and when he should correct the mistake.
- Owner Directed Changes
Owner directed changes occur when a property owner requests to make construction changes after the project has begun.
An owner directed changes clause lays out, among other things, how these changes may affect the completion time and price of the project.
A common example of an owner directed change is when an owner decides that they want to upgrade some of the materials being used. For instance, an owner may inform their contractor that they would like to floor a room with tile that was originally to be floored with carpet. Given that this type of change may significantly increase the cost of labor and completion time, a change like this could quickly lead to disputes over changes in price and completion time.
Work with Arizona’s Leading Real Estate Law Firm
It can be frustrating to find yourself wrapped up in a dispute with a contractor or property owner midway through a construction project, and the issue only gets worse if you don’t have contract that clearly specifies the rights and obligations of each party. While every possible situation can’t be accounted for in a contract, there are many alternatives to litigation that can be baked into a contract to require both parties to try to solve disputes in a quick, equitable, and cost effective way before filing a lawsuit.
The attorneys at M&G can assess any construction work or real estate project to draft a contract that protects your interests and decreases the potential for litigation. Contact us today at 602-562-7218 to schedule an initial consultation or make an appointment on our website.