A construction contract does not have to be in writing. A contract simply requires an offer, acceptance, consideration, and intent. Where no written contract exists, if the parties agree to construct and work is undertaken, then a contract is formed based on the verbal agreements. However subsequent performance and terms may cause questions/issues to arise.
These questions/issues may include:
- Scope
- Basis of payment terms
- General Liability
- Liability for delays
- Materials to be used
- Performance criteria (Technical Criteria)
- Dispute resolution / Termination
Conversely, an over complex and convoluted contract may disproportionately allocate risk. This may cause project cost to unnecessarily increase because of the contractors preserved risk and may limit respondents to the solicitation. These may include:
- Uncertainty of work conditions
- Delaying events
- Indemnification
- Liquidated damages
Given the opportunity, an owner should favor efficient allocation of risk between parties to a project that simultaneously reduces risk and improves project performance. The goal should be to draft language that has some project specificity and to protect the owner’s interest without dissuading prospective qualified bidders.
Contact us and we can help you develop suitable agreements.