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What are General Construction Contracts?

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  • Written By: C. Daw
  • Edited By: O. Wallace
  • Last Modified Date: 18 November 2016
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General construction contracts are an agreement between the party getting the construction work done and the person who will be doing the construction work, witnessed by a third party. The contract generally contains details of the type of work to be done, a time frame for completion, completion criteria, payment terms, dispute settlement terms, termination terms, ownership of work and any other matter the first two parties may feel necessary to keep on record. It is a binding legal contract that both parties must abide by, otherwise a court ruling can be sought if either one does not fulfill it.

It does not matter whether the job is large or small. General construction contracts are real time savers. The risks are reduced as all aspects of the work are detailed out and agreed to beforehand in the contract, for the benefit of both parties. The contract also avoids unnecessary disagreements, frustrations and lawsuits if the details are sufficiently elaborated, discussed and formalized by all parties in the agreement.

Before going into general construction contracts, a suitable contractor has to be located. Some important aspects should be looked into, understood and settled before selecting the right contractor. A recommended contractor would be a better option than someone totally unknown. Friends or colleagues should be able to recommend and provide information on details of timely completion, budgetary limits, and adherence to an initial contact.

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General construction contracts should be tailored to meet the unique requirements of the project. The agreement must cover the scope of work and could be detailed into specifications, including final drawings. These should form an integral part of the agreement. The part of the work that is not covered by the agreement should also be mentioned without ambiguity. The contract should include the method of handling variation in orders that may occur during the project term, and that is not originally covered in the initial scope of work.

It is very important that the general construction contract agreement be thoroughly understood and all clauses clarified before the final signature. Arbitrary clauses that are not in the best interest of either party should be removed. Legal consultation may be resorted for inclusions or interpretations of some of the legal aspects. It is preferable to avoid a commitment to possible cost increases after the agreement has come into effect. Substitution of materials specified by the contractor should also not be agreed to. It should also be the contractor's responsibility to clean up after the construction work is completed.

The construction contract should contain the payment terms, schedule and manner of payment. The payment could be made by the owner or by a financial institute on their behalf. Mandatory inclusions should be made for the dates for commencement and completion, construction time table, warranty on workmanship and materials, details of insurance by all parties, defaults, interference, ownership of materials, and security.

It is of vital importance to reserve some clauses in the construction contracts for mediation, jurisdiction and arbitration. Settling of disputes by arbitration is often more effective for both time and expenses. The general construction contracts should be drawn up in a manner which makes provision for arbitration as well as the right to go to court. Discussing the matter beforehand and reaching a mutual agreement on the course of action to be followed will generally ease tensions on both sides.

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