For contractors and other construction professionals, work-associated contracts are your foundation. Poorly written or one-sided agreements can lead to disputes, delays and even legal action.
Recognizing red flags in a written construction contract is more than smart – it’s essential. Before you sign, take a close look at the fine print. The following are some indicators that a contract may be riskier than it’s worth.
Vague or one-sided payment terms
If the contract lacks clearly-written payment milestones or gives the client too much control over when and how you get paid, that’s a red flag. Watch for language that allows indefinite delays in payment or ties compensation to subjective satisfaction. A solid contract should outline specific payment schedules tied to measurable progress.
Unclear scope of work
A contract that doesn’t clearly define the scope of work leaves you vulnerable to “scope creep” – where clients expect additional work without additional pay. Look for detailed descriptions of deliverables, materials, timelines and responsibilities. If the scope of work provisions are vague, you could end up footing the bill for work you didn’t agree to perform.
Excessive indemnity or liability clauses
Be cautious of clauses that shift all liability onto you, even for issues outside your control. Some contracts include broad indemnification language that could make you responsible for the client’s legal fees or damages. Fair contracts balance risk between parties and limit liability to what’s reasonable.
No dispute resolution process
If the contract doesn’t include a clear process for resolving disputes – mediation, arbitration, etc. – it could mean costly litigation down the road. A well-drafted agreement should outline how disputes are handled.
Spotting these red flags early can save you time, money and even stress. When in doubt, consult a construction law professional before signing.
