Construction Contracts Attorney in Los Angeles, California
It goes without saying that there are a lot of moving parts in a construction project. The two leads of the production are the property owner and the contractor who will execute the project. The supporting cast can involve architects, design firms, engineers, and a myriad of other industry professionals.
What binds everyone together is contracts that clarify the relationships, obligations, and details of the project. The owner and contractor will enter into a contractual agreement regarding the many aspects of completing the project. Both will be obligated to live up to their parts of the agreement, the owner to pay, of course, and not interfere unnecessarily with the construction work, and the contractor to bring the project to completion on time and according to specs.
The contract thus becomes the guiding document for the duration of the project. Of course, the contractor will necessarily have to rely on subcontractors to carry out many of the tasks necessary to complete everything, so there may be additional contracts involved. If the contractor or owner fails to live up to their contractual obligations, then a breach of contract can ensue, with litigation potentially taking place.
To protect both owner and contractor, the agreement should be well crafted and put into an express, or written, contract. Attorneys should be involved to make sure that both sides have their rights and interests well protected. A standard-form contract (like a do-it-yourself, fill-in-the-blanks document) will likely not cover every angle or every possible snag in the road and can prove hard to enforce.
If you’re entering into a contract for a construction project in or around Los Angeles, California, contact the Builders Law Group, Inc. We will help you draft a comprehensive contract that reflects your goals and protects your interests. We can also review and suggest modifications to any contract you’re considering. We proudly serve clients throughout the counties of Los Angeles, Ventura, Orange, Riverside, San Bernardino, and San Diego.
Types of Construction Contracts
Some of the more common types of construction contracts include:
The Lump Sum Contract. The owner agrees to pay the contractor an agreed-upon lump sum once the project is completed.
The Lump Sum and Scheduled Contract. Again, a lump sum is agreed up, but instead of making the payment when the project is over, the owner makes scheduled payments during the construction time.
The Cost Plus Fixed-Fee Contract. In this arrangement, the owner reimburses the contractor for all costs associated with the project, plus an agreed-upon fixed fee above those costs.
Cost Plus a Percentage of Cost Contract. This is similar to the cost-plus fixed fee except instead of a fixed fee, the owner will pay the contractor costs plus a percentage of those costs.
These are some of the more common construction contracts, but there are variations and other types that may come into the picture, including just a simple commercial contract, which can give both the owner and the contractor more latitude in going forward on the project. The contractor, for instance, would not be limited to a certain fee agreed to in advance.
Elements of a Construction Contract
The more detailed the contract, the more both parties are protected. The elements of a solid contract include:
Name, address, and signatures of both parties. Both sides must be identified and signal their acceptance of the contract.
Contract price and payment schedule.
Construction plans and material specifications. The agreement should include all specifications for the project, including even the materials to be used.
Timeline. The contract should specify an agreed-upon finish date, allowing of course for intervention by mother nature.
Insurance obligations. The contractor will need to have workers’ compensation coverage and the owner liability coverage, in case of a natural disaster. All parties must be wary of safety issues and protect themselves through proper insurance channels.
Dispute resolution. This is a big one. It’s not uncommon for construction projects to result in disputes between owner and contractor, and the contract should specify how disputes are to be resolved – Negotiation, mediation, or arbitration.
Penalties for failure to perform. The owner may wish to specify penalties should the work not go as scheduled or as specified.
Warranties. Both parties should agree to certain warranties as to payment by the owner and fulfillment of construction standards by the contractor (which goes hand in hand with the penalties clause mentioned above).
Authority. Perhaps a certain product or material is no longer available or has risen in cost to threaten the agreed-upon completion price. Who has the authority to alter specs or change plans when difficulties arise or circumstances change?
If matters do end up in litigation, a well-crafted contract that addresses every issue that may arise is easier to explain in court. If the issue under litigation is not covered by the contract, then it becomes a matter of interpretation by the parties to the dispute, a version of “he said-she said” but in another context.
Breach of Contract
A breach of contract occurs when one party fails to live up to its obligations under the contract. For instance, the owner misses a scheduled payment in retaliation for what he or she sees as slow or unacceptable work, or the contractor fails to complete a part of the project to specification or on time. Breaches of contracts are actionable and can end up in court.
There are two types of breaches: material and immaterial (also referred to as major and minor).
A material breach would occur if the owner simply stopped paying for no reason, or if the contractor completely fell behind the construction schedule without any extenuating circumstance or produced shoddy workmanship.
An immaterial breach could be that a needed material for the project was delayed in delivery because of unforeseen circumstances, perhaps weather or a strike at the manufacturer. Minor breaches are usually not actionable.
Construction Contracts Attorney Serving Los Angeles, California
A solidly crafted contract is the key to any construction job. This does not mean that delays or material problems might not surface due to unforeseen circumstances, but it affords both parties the rights and protections they need when a dispute arises. If you’re about to embark on a construction project in or near Los Angeles as an owner or contractor, contact us at the Builders Law Group, Inc. We can help you craft or review what you have with an experienced eye. Protect your rights by making sure every angle of the project is covered and everyone’s role is clearly spelled out.