The world of business revolves around legally binding agreements, and the construction industry is no different.
Whether for material purchases, equipment and scaffolding rentals, residential renovations, commercial build-outs, site development, teaming agreements, or government buildings; whether involving contractors, subcontractors, architects, engineers, owners, or public entities; whether a simple one-page proposal or a full AIA contract with a thousand pages of incorporated conditions, specifications, and drawings; and everything in between: the terms of construction contracts vary wildly and can have significant consequences on the course of a project and the rights and obligations of the contracting parties.
Contract Exhibits and Documents
While the specifics of a contract are often unique, there are some common provisions with significant consequences that construction industry professionals should recognize, incorporate, or be wary of. For one, many construction contracts refer to or incorporate exhibits or other documents (most often prime contracts in the context of a subcontract) that are not attached to the contract. Make sure all exhibits are attached and all incorporated documents are made available and reviewed so that the full terms of the contract are understood, and the parties’ expectations are truly compatible.
The Pay-When-Paid Clause
Another commonly problematic provision is the pay-when-paid (or pay-if-paid) clause, which shifts the risk of nonpayment by an owner from the general contractor to the subcontractor. For general contractors, this term is extremely beneficial and may lead to substantial savings in the event an owner refuses to pay in full for the work, but the clause needs to be phrased explicitly and use certain language to be legally enforceable. For subcontractors, these clauses can lead to work being performed with the possibility that it will legally not be paid for and could be financially devastating. If the provision cannot be negotiated out altogether, then it is important that the subcontractor fully understand the risks of moving forward, as well as the nature of the project and trustworthiness and dependability of its participants.
Contracts Specific to Florida
In addition, Florida has specific legal requirements and restrictions for some types of construction contracts and provisions, such as contracts for the improvement of residential property, indemnity provisions, and certain types of venue provisions. It is important these requirements are known and followed to avoid forfeiting substantial legal rights, or assuming the existence of legal rights that will not be enforceable.
Marlowe McNabb Machnik, P.A. can help you draft, negotiate, review, and propose revisions to all types of construction contracts.
Let's Get Started
Contact us today to find out how we can help you.