I rarely see good contracts. Most people just make some stuff up without really thinking about what they are doing but as you grow you will find it necessary to create a contract template that would take a beating from the talented and “useful” legal minds currently knocking clueless contractors into the poor house. Check out the products page for a fully legal contract template. This article does not constitute legal advice. Consult an attorney for more information regarding contract law.
A contract is an agreement between two people. It should always be in written form to avoid confusion.
A contract can be changed when all parties agree through a contract addendum, amendment or in a construction contract a change order.
Signing a contract is called execution
A contract must be balanced, fair and drafted with the intention of not misleading either party.
It must name both parties along with their performance. Performance means what they agree to do within the contract.
A contract must meet all legal requirements of the jurisdiction in which it is subject.
2. Required Language
In California you must have certain language on your construction contract depending on the situation. Here is a small excerpt of the required language…
he schedule of progress payments must specifically describe each phase of work, including the type and amount of work or services scheduled to be supplied in each phase, along with the amount of each proposed progress payment. IT IS AGAINST THE LAW FOR A CONTRACTOR TO COLLECT PAYMENT FOR WORK NOT YET COMPLETED, OR FOR MATERIALS NOT YET DELIVERED. HOWEVER, A CONTRACTOR MAY REQUIRE A DOWNPAYMENT." (10) The contract shall address the commencement of work to be performed in substantially the following form: (A) A statement that describes what constitutes substantial commencement of work under the contract. (B) The heading: "Approximate Start Date." (C) The approximate date on which work will be commenced. (11) The estimated completion date of the work shall be referenced in the contract in substantially the following form: (A) The heading: "Approximate Completion Date." (B) The approximate date of completion. (12) If applicable, the heading: "List of Documents to be Incorporated into the Contract," followed by the list of documents incorporated into the contract. (13) The heading: "Note About Extra Work and Change Orders," followed by the following statement:
The requirements are too long for the content of this article but you can download a fully legal contract template on the products page of this site.
3. Important Language
You will not be required to add these to your contract but its a good idea to have the following.
Names of all parties, dates and description of the property to be worked on and it’s owner. It doesn’t hurt to include construction lender information as well.
A detailed list of what will and will not be done as performance of the construction work. A vague contract will favor the homeowner if you end up in court.
A location and method to settle disputes such as arbitration is required to be performed in your local county.
A requirement for all work to be in writing and to not allow casual negotiating instruments.
A contract number on the header and footer so that you can identify the entire contract as a single document tying the signature on the back page to the rest of the contract.