A well-written construction contract covers every detail of the project from beginning to end, outlines the duties of each party, recognizes and allocates risk to the appropriate parties, and allows the parties to plan for the future should any conflicts arise during the course of the project. On the opposite side of things, a poorly drafted construction contract can easily lead to litigation as a result of missing or unclear provisions. Fortunately, there is a way that you can ensure all of your current and future contracts are in the best interest of your construction company.
Our team of Toronto construction law attorneys at Cotney Canada is well-versed in all aspects of construction law, including contract negotiation, drafting, and review. Not only can we review your contracts for errors, omissions, and blame-shifting language, but we can also negotiate contracts on your behalf to ensure that they fairly allocate risk among the parties. In this article, we’ll discuss pertinent contract clauses that deserve careful attention.
Scope of Work
One of the most important provisions of any construction contract is the scope of work. It details how the project will be carried out, decides when specific deliverables are due, outlines the expectations of all parties involved, and provides specific guidelines for the project administrator regarding payment, changes, and limitations of the project. A well-written scope of work is often your best defence against payment disputes, defects, project delays, and other common issues that arise on your construction project as it identifies where liability begins and ends. Leaving out vital information, such as how any changes to the original contract will be handled, can easily lead to lengthy and messy legal disputes. Essential elements to include in your scope of work are as follows:
- Project Overview: A brief, concise overview of the project.
- Project Deliverables: A section outlining all the expected goals and outcomes that should be achieved.
- Project Scope: A list of any and all quantifiable goals for the project, including specific techniques or methods required for their completion.
- Project Schedule: A schedule of when all the required tasks should be completed, including delivery dates and relevant milestones.
- Project Management: A section detailing the functions of project administration, including how and when payments will be made.
If you have any questions about creating a well-defined scope of work or would like an attorney to review your scope of work for areas of improvement, reach out to a Toronto construction law attorney from Cotney Canada.
Termination for Convenience
Especially given the impact of COVID-19, many project owners may wish to walk away from construction projects that are currently underway or at least shelve them until it’s feasible to work again. A number of construction contracts provide a party with the right to terminate or suspend the contract at any time upon the provision of reasonable notice via termination for convenience. This is a hugely beneficial clause for all parties involved as it allows the contractor to collect payment for finished work and recover reasonable expenses of termination and the owner to walk away without having to provide any anticipatory payments resulting from the terminated work. It is, however, important to remember that termination for convenience is only legal when it is specifically written into the contract and there is no contract breach made by the other party.
Indemnity clauses are easily one of the most negotiated and heavily disputed provisions in any construction contract. This type of clause is intended to hold one party liable for any losses or damages incurred by the other party during a construction project. In simplest terms, it exempts parties from liability caused by their own actions or holds one party harmless for the losses of another. Suppose a third party injures themselves on the stairs of a building and sues the owner of the building for their injuries on account of the fact that their stairs were not built in accordance with the building code. The indemnity clause would then allow the owner to make the contractor compensate them for the restitution provided to the third party. You should always hire a Toronto contractor lawyer to draft your indemnity clauses as they must be applicable to your projects and readily enforceable.
Change Order Provision
Change orders during a construction project are one of the most heavily litigated issues in the whole of the construction industry. Unfortunately, no matter how well you handle time and project design, it’s likely that changes will still occur. Fortunately, you can anticipate these changes and establish a procedure for issuing any written adjustments, any costs for changed work, and any schedule changes with a change order provision. An ideal change order provision should include how the cost of changes will be calculated, including schedule and equipment adjusted, how much time should be allowed for the owner to accept or reject the change order, and when the contractor will be permitted to halt work pending on a change order decision. If you need any assistance adding any of the provisions discussed thus far into your contract or reviewing your current contracts for potential pitfalls, don’t hesitate to contact one of the Toronto contractor lawyers with Cotney Canada.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.