Benefits Of Getting Contracts For The Construction Industry

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Written contracts are useful tools for any business, and construction companies are no exception. In fact, contracts can be both practically useful and strategic in the construction industry. This newsletter will introduce some of the practical benefits of getting contracts for your projects and then discuss some key provisions of construction contracts. Understanding these provisions will help you to manage risk through careful scrutiny of contract terms and knowing when to call on counsel for assistance in negotiating and drafting contract provisions that fairly allocate risk among the parties. Taking the time to negotiate contracts will yield at least three distinct benefits. The first benefit, which may be obvious but still merits…show more content…
If the other party moves quickly on the fundamental terms and you are able to establish those terms without too much trouble before tackling the more peripheral details, you can rest assured that you and your counterparty are on the same page. However, when that portion of the contracting process fails, it becomes obvious that there is no deal. The third practical benefit of contracting is that it will give you key insights into the integrity of the other party. It is especially worthwhile to get a sneak peek at whether the counterparty will keep its word. Thankfully, you do not have to visit a fly by night fortuneteller to discover this information. Negotiating a contract will give you the preview you need. Observing how the other party deals with contracts will reveal their general method of handling business affairs. A company that agrees to pay within 30 days after the job ends but then rejects firm language requiring payment in 30 days or requiring interest if payment is made later than 30 days is probably not committed to paying on time. The benefits extend beyond these three areas too. The specific provisions you agree to will impact the bottom line of your business over time. Well drafted contracts are a key factor that determines survival and profitability in the construction industry. Such contracts lays the foundation for a healthy working relationship and a profitable job by defining key terms and issues including the scope of work to be performed, the
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