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Construction contract basics

North Carolina contractors who accept or are awarded projects no doubt are eager to get started on the work. However, before anything is done, they should take the time to create a clear contract with their customers. This may well benefit both parties and hopefully prevent problems later on. If a problem does arise, however, the construction contract may help to direct a resolution.

As explained by the American Bar Association, a solid construction contract should include a clause detailing any warranties and bonds to be provided by the contractor to the client. In addition, if one or more subcontractors are to be used during the project, a clause regarding indemnification is a must. This will identify who is the responsible party should any claim be made by a third party.

Time Money adds that the contract should clearly detail out the scope of work including not only what is to be done but also what is not to be done. This scope of work should also be connected to a clearly identified timeline for the project start, key milestones and ultimate completion of the job. Most construction projects are billed in phases and these terms should also be part of the original contract. The method of payment and any associated date or work milestones that trigger payment should be clarified.

Nobody wants to enter a contract with the thought that it will not be completed, but in the event that one party needs to cancel the project, the original contract must provide options on how the agreement may be terminated by either party.

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