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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