Construction Contract

A construction contract is frequently prepared by a building contractor to explain the terms of their relationship with a property owner. This important document, signed by both the building contractor and the property owner, helps establish each party’s expectations and provides for factors like how meteorological delays and material shortages will be addressed. It also specifies how much the project will cost and the working hours on site.

Building projects may easily become perplexing if not properly handled.

While a construction contract is not a panacea for all potential issues in a building project, it is an essential document for defining limitations and responsibilities for all parties involved. If a dispute arises, the construction contract will be used as the basis for legal procedures.

To create a construction contract, you’ll need to have the following information:

Construction contracts created with Themis Partner, as you might imagine, include legal wording describing the non-employer relation, dispute resolution, and, eventually, liability for losses.

Construction contracts are classified into five types:

1. A fixed fee is set for the services delivered: This is a one-time payment that covers all supplies and labor.

2. Time and materials: The customer paid the contractor a negotiated cost for materials and labor. The contractor profits by charging the customer more than what they pay their employees.

3. Costs plus: The customer promises to pay the contractor’s supplies, labour, and any other expenditures “at cost.” The contractor will benefit by receiving a portion of the overall cost or a flat fee. The client may include a condition indicating that the overall building expenditures must not exceed a certain amount.

4. Unit Price: The project is divided into smaller portions, or units, instead of having a single total price.

5. Guaranteed Maximum Price: As the name implies, there is a guaranteed max price, and the contractor is liable for any costs that exceed that guaranteed maximum.

Your fees are obviously on your client’s mind, since they will have a substantial impact on their budget and capacity to complete the job.  Themis Partner recommend that you present a couple of payment terms alternatives depending on whether your projects are commercial or residential, as well as your client’s availability to finance.

If the customer is confident in his or her ability to pay your fees, you might demand a deposit and the remainder upon completion. Alternatively, you might set up progress payments in which you are paid every number of days, weeks, or months. Work with your customer and the project scope to come up with a payment plan that everyone is comfortable with.

Assume your contractor and his crew abruptly ceased working and are demanding extra payment for items and labor that were not initially agreed upon. Or, your customer, the owner, refuses to pay you when the assignment is completed. In any case, you should have a written agreement to safeguard your rights. Without an agreement, you risk squandering time and money, not to mention compromising the quality of the building.

Construction success is dependent on well stated goals and timelines. Mistakes or delays have a negative impact on both owners and contractors, causing owners to incur additional expenses because they are unable to use the property for the intended purpose at the intended time, and contractors to incur additional costs for labor and equipment.
Owners can protect themselves from building delays by including a liquidated damages provision in their contract. Liquidated damages are a defined amount paid to the owner by the contractor for each day that construction is postponed. Rather of disputing losses in court, the client and the contractor might agree on a liquidated damages figure in advance.

To be upheld, the owner’s damages must be unknown or difficult to estimate ahead of time. Furthermore, liquidated damages must be fair and cannot be a penalty. And the construction delay cannot be the result of factors beyond the contractor’s control, such as modifications in the job or inclement weather.
Here are some of the most typical causes of construction delays:

Including a liquidated damages provision has certain dangers. The agreed-upon sum may not be sufficient to compensate the entire extent of the owner’s damages. It might even be more than what a judge would have ordered. However, with a liquidated damages provision, the owner may be confident that he or she will be compensated for construction delays, and the contractor can minimize his or her liability.

The fundamentals of Singapore building and construction legislation come from the Building and Construction Authority Act.

1. Singaporean building and construction law is similar to those of other common law nations. Contracts between building and construction sector players are often in standard form.

2. The terms and conditions of Singapore’s standard form contracts are not identical to international contracts, but they follow a similar fundamental framework.

3. Aside from contract law, tort law has a substantial influence on the rights and responsibilities of building and construction industry participants.

4. Statutes and regulations also influence industry behavior and convey public policy issues. Singapore, for example, has introduced legislation to govern the substantive rights of parties in terms of payments, as well as mandatory dispute resolution in support of the right to timely payment, as has many other Commonwealth jurisdictions.