Every company seems to have its own form of contract these days. Whether it’s the general contractor, the plumber, or the tile distributor, everyone wants you to sign “their” contract, so that they’re protected on the job—or so they hope. In the rush to get a job and get it started, many overlook important details in the contracts that they sign. Specifically, a lot of construction contracts are missing two important provisions.
Legal Fees
If you have to pay an attorney to prosecute or defend a claim, whether it goes to trial or not, the ability to recover those fees from the other side can dictate how hard you fight or how quickly you settle. So when reviewing a contract, make sure it includes a provision that allows the prevailing party, hopefully you, to recover incurred attorney’s fees and costs.
If your agreement is not in writing (big mistake) or if it is not signed (another mistake), then the ability to recover legal fees becomes much harder, if not impossible. This can happen with construction clients who have “terms and conditions” on their delivery tickets or invoices but who never get those documents signed. In those cases, the unsigned terms and conditions are useless.
Dispute Resolution
Disagreements are a natural outgrowth of many contract relationships. When they occur, it is helpful to have a pre-agreed procedure in place to resolve them. Often times this is just left to a simple statement that disputes shall be arbitrated or litigated. We would suggest something more.
Ideally, the parties should agree to have a principal to principal initial meeting within 30-60 days of one party notifying the other of a dispute. If that doesn’t resolve the problem, then the parties should agree to mediate their dispute before a jointly selected, and certified, mediator. Mediation should always be a prerequisite to the initiation of litigation or arbitration. Each party should absorb their own legal fees during this process and before litigation. The mediator’s fees on the other hand should be split evenly between the parties.
Construction is a very risky business. Lots of things can go wrong, and when they do, it can be very expensive to fix them. Having these two provisions in each of your agreements will surely help.
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