Construction Contract

"A contract is a legally enforceable promise between two or more parties. A contract can be verbal or written. These agreements often require one of the parties to pay or indemnify the other party's losses suffered in fulfilling the terms and conditions of the contract. For a contract to be legal, there must be an offer (what the contractor says he will do), an acceptance (the client accepts the bid) and consideration (some form of payment from the client to the contractor). Although it seems to happen if the contractor is never paid for the work then the contract could be considered void. This point is often neglected since money is sometimes withheld from a contractor even though he did do the work. Because the contract is the framework of the agreement between the parties it will establish which party has assumed or negated a particular risk or waived rights in the event of an incident involving a risk. Before you enter into an agreement you should seek the advice of an attorney familiar with contract law.Contracts have significant legal and insurance consequences that will impact your business. If used properly, contracts are an effective way to manage risk. Contracts may be written or oral. Written agreements, when properly drafted, provide a clear understanding regarding what each of the parties has agreed to. In other words the offer, agreement and consideration are made very clear. Oral agreements, while legally enforceable, can create problems because of the lack of a clear statement of the contract that can be referred to later. Agreements and understandings negotiated in good faith are sometimes misinterpreted at a later date, especially after a loss. It is not recommended to use oral contracts.It is equally important to use written change orders as the means of altering an existing contract otherwise you are simply entering into a new oral contract with all of its problems. The lack of change orders is one of the primary motivators of construction litigation."