Construction Contracts/Contract Surety Bonds/Neill Bonding & Insurance/Bonding/Bonds/Key Contract Terms

Four key items to look for in a Construction Contract. 

1.  WARRANTY:  Preferably a one year warranty, which is standard.  Make sure the warranty does not extend beyond two years.  Only a standartd level of maintenance and not a higher stander.  No “efficiency guarantees” taht state the compelted project will functuion up to specific standards as required.  If not, the contractor must re-do work until acceptable.  As a result, the contractor may become responsible for the design of the project and responsible for any errors of the engineer or architect. – VERY RISKY

2.  LIQUIDATED DAMAGES fMake sure the LD’s are spelled out in a specific dollar amount.  Typically the GC’s Liquidated Damages are a pass-through to sub contractors.  Know up front what these charges are.

3.  CIRCUMSTANCES AROUND DEFAULT:  The circumstances around a default must be specific.  The surety must be a party to any and all default notification.  Many times a contract may read that the Owner/General Contractor can default a contractor, complete the work at whatever cost and means necessary without ntoifying the surety and simply send them a bill. -Very Dangerous.  The subcontractor or surety must have a certain specified amount ot time to solve or” cure” the problem.

4.  PAYMENT SCHEDULE:  It must be clearly stated how the payment schedule is set up, regarding invoicing, receiving checks, holding retainage, etc.

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