A contract is a legal agreement between two parties that recognizes and governs the legal obligations and rights that each party has towards the settlement. In the construction field, the legal agreement will be between the owner and the company he/she hires for construction needs.
What Is the Purpose of a Contract?
The primary purpose of a contract is to act as a tool structuring the relationship between the two parties. It also records details about the different agreements that they have accepted to do for and with each other. For instance, if you have major home repairs to conduct such as foundation repair or electrical issues, the contract will include a detailed plan of the project and specify the exact objectives concluded with the contractor.
What Are the Elements That Should Be Incorporated Into a Contract?
For small works like replacing a kitchen faucet, a contract might not be necessary. A simple purchase order is enough. This will include the name and address of the owner and the company that will perform the task, a short description of the job to be done, and the cost.
However, for bigger jobs like replacing your roof shingles, the contract will also contain details about the materials used, the product specifications, the brand, warranties offered by the contractor etc. For such complex reparations or extensive renovations, the contract will also be more lengthy.
The contract should also specify the basic rules that a contractor must adhere to in order to be covered in case of an accident. For instance, the contract should mention that the contractor
- has valid a professional liability insurance
- is registered with the provincial workers’ compensation system or, if exempt, has provided you with documentation to prove it
- has a Business Number
- has a license number if your municipality requires contractors to have one.
- make sure that any subcontractors they employ to work on your project will fulfill these obligations.
What Makes a Good Contract?
A good contract should firstly clearly outline all of the aspects of the partnership with the contractor concerned. Secondly, it should have information about the tasks to be executed, how it will be done and when the works will start.
A good contract is one that treats both parties equitably. It reassures the client that he/she will receive what has been promised, on time, and at the agreed price. In the same way, the contractor also lays out his or her duties properly within the contract and is assured that he/she will get the full amount charged, on time.
In most cases, once the client and the contractor agree on what should be done and are set to proceed with the construction project, the contractor will firstly draft a contract. The draft must be thoroughly reviewed to ensure that it fully conveys what the customer expects and what he/she has agreed to with the contractor.
If you disagree with any part of the contract or do not understand some of the terms, do not sign! Talk to the contractor first and clarify things, then have them amend the contract accordingly before signing. Keep in mind that once signed by both parties, the contract is a legally binding agreement.
If you need any help with your construction project, Kane Construction Management offers generating and analyzing construction budgets, completion schedules, construction defects cost assessments, general conditions, bidding and contract documents as part of their professional services. Do not hesitate to contact them or browse through their website for more information.