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Avoid these 6 common mistakes in construction contracts

On Behalf of | Jun 19, 2024 | Construction Contracts

A construction project’s contract must be enforceable to achieve its intended goals, and a well-crafted one protects the interests of all parties. Mistakes can happen, so awareness of these most frequent pitfalls is a step toward ensuring the work is done.

What to avoid in construction contracts

In Texas, as in most states, parties can set the terms of their agreements. However, the State has specific guidelines of what an agreement must include, which parties may overlook sometimes. Examples are:

  • Unclear scope of work and specifications: An ambiguous scope of work can cause misinterpretation. The details of the project’s requirements, materials, and deliverables should be clear.
  • Missing change order procedures: Not having change order procedures is a risk as construction projects rarely go exactly according to plan. There should be a well-defined procedure for proposing changes, obtaining approvals and documenting cost adjustments.
  • Inadequate payment terms: Late or incomplete payments can cripple a project. Having clear terms on payment schedule and any associated penalties for delays is essential.
  • Incomplete dispute resolution mechanisms: Sometimes, parties may skip provisions for resolving disputes, which is a concern because construction disagreements are inevitable.
  • Overlooked insurance requirements: Lack of insurance coverage is a threat to financial protection in case of accidents or property damage.

There must always be some flexibility to correct a serious mistake made in the construction contract. The opposite can have serious and costly implications for the projects and all the parties involved.

Obtain legal counsel

Construction contracts are often complex legal documents. So, it is highly advisable to consult an attorney during contract drafting and review. They can help identify potential issues, make sure the contract aligns with Texas law and advocate for your interests. voiding these mistakes can mean fewer delays and misunderstandings.