What is Construction Contract?
It is a legal document that is developed for the construction project. It is a mutual agreement between the owner/owners and contractor/contractors and it foundation is laid on the policies and conditions that are agreed by all the entities involved in the agreement. Different types of construction contract are in practice and the owner has full authority to decide the type of contract.
The common types of contract are as follows and the owner can select the best-suited contract type.
- Item rate contract
- Lump sum contract
- Lump sum and schedule contract
- Cost plus percentage of cost contract
- Cost plus fixed fee contract
- Special contract
How to Write Construction Contract?
In the construction contract, the duties and rights of client and contractor are stated and explained. All the necessary terms and conditions are included in the agreement.
The following steps must be considered while writing the contract.
- Write the title of the contract that must include the purpose of the contract, date and the names of the parties entering into the contract. It would be better to include the location of the site and the duration of the project.
- Include the details of the project, work, and standards of performance. Details of materials, types of equipments and all other details that are necessary can be included.
- Financial issues must be addressed in detail. The total price for the agreement, advance deposited, and amount submitted for security purpose refundable or non-refundable and schedule of payments must be stated clearly.
- Define the methods to make any changes to the project if needed during the term of the project.
- Define the methods and suggestions for resolving any disputes and issues arise during the term of the contract.
- Get signed the agreement by all the parties involved in the agreement along with date and addresses.
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