A signed contract can dictate the financial success or failure of every Florida building project. An agreement may hide risks that can strip away profit by protecting owners from future liability. If you are a subcontractor, what terms could derail your entire operation?
Pay-if-paid provisions
This clause establishes owner payment as an absolute condition that must be met before a subcontractor has a legal right to be paid. It is a major red flag because it shifts the entire risk of owner nonpayment directly onto the subcontractor. You could find yourself completing a project and receiving nothing if the owner fails to pay the general contractor.
No damages for delay
This provision limits a contractor’s remedy for project stalls to mere time extensions, even when the owner is at fault for the stoppage. It is risky because it bars you from recovering mounting overhead costs or labor price hikes during the waiting period. Without compensation for these delays, a stalled project can quickly turn into a significant loss.
Broad-form indemnity
Meanwhile, a broad-form indemnity clause requires one party to pay for the negligence or mistakes of the other, regardless of who is responsible. To remain valid in Florida, this clause must contain a specific monetary limitation. Unchecked indemnity can create an uninsurable gap that leaves your company’s asset base vulnerable to the owner’s errors.
Other risky clauses to check
Furthermore, it is crucial to look for “termination for convenience” language that allows an owner to cancel without paying lost profits. Additionally, it is critical to check for latent defect clauses that attempt to extend the timeframe for an owner to sue over hidden construction flaws. In Florida, there is a four-year limit for discovery and a seven-year hard deadline for latent defects.
Seeking to secure your project’s future
Precise terms in a construction contract can help maintain the essential harmony between diligent labor and rightful compensation. However, navigating a contract review can be complex, requiring a critical perspective. By seeking legal advice, you may better shield your business from pitfalls as you seek to secure your project’s future.
