As an independent builder or construction contractor, it is vital that you keep yourself and your business legally protected when taking on a job. Before you start your construction projects, you want to draft a detailed contract outlining the exact work you will perform and the responsibilities you assume in case of unexpected issues.
But with so much on your plate, you probably don't have time to sit down and write all the construction contracts from scratch. However, it is important to make sure all vital information is covered every single time. So what's the best workaround? Well, you can create your own construction/builders contract template that provides you with a basic structure to follow so you can reduce errors and speed up the drafting process.
To help you with this, we'll go over the essential elements to include in your contract template.
Note: Don't settle for a simple construction contract template, instead, use Bonsai's free templates which you can fully personalize to fit your needs. Streamline the process with a well-designed, legally-vetted construction contract sample that keeps you safe and gets you started on the right foot.
Essential Elements of a Construction Contract Template
When creating your builders/construction agreement template, remember this is a legal document, so all the information must be as detailed and clear as possible. Any omissions or mistakes could easily lead to disputes or legal ramifications. Keep in mind there are different types of construction contracts such as lump sum or fixed price, so the exact information you include in it will depend on the type of contract needed.
For a basic construction contract structure, make sure to include the following details.
Project & Parties' Information
The first section of your construction contract template is to provide detailed contact information of the property owner and you as a general contractor. The entire agreement reflects the two understanding parties.
Include everyone's full name, address, phone number and email address. You should also include some information about the project such as work site location and describe the property in legal terms (based on the deed record in the county clerk's office).
When you intend to contract out some of the work on the site, subcontractor information is frequently included in the construction contract as well. As a general contractor, you may take on all or a portion of the duties involved in a building project, or they may hire other businesses and people. You will also be in charge of overseeing contracts and payment arrangements with subcontractors while subcontracting. You should clearly define their liability in case they breach their obligations.
Scope of Work
Next, your construction agreement should include a detailed description of the work you will perform (scope of work). Make sure to describe the tools, equipment and materials that will be used to complete the project, and include any specifications, plans, or construction documents. A high level of detail is important in this section as any misunderstanding could lead to a dispute. You should also include an agreement of responsibilities and liabilities of each party in the case of unforeseen situations or acts of God that affect the project such as storms, floods, or a lack of supplies.
Construction Project Schedule
Next, include the start date and projected end date of the construction work, as well as the deadlines agreed upon for the different phases of the construction. It's also a good idea to include a clause in the contract stating that you, the contractor, are not responsible for the property owner's failure to obtain any required permits, permissions, or easements or for any other delays brought on by bad weather. Here's an example of a project schedule for construction.
Contract Price & Payment Terms
In this section of your construction contract template, you must list the total costs of the completed project (materials, labor, tools and services provided) and the percentage required as a down payment to start, as well as determine the amount and date of installments. You can define an effective date for each payment, or agree to charge a set amount after each phase of the project is completed.
You should also include the allowances you will need for the subcontracted work such as plumbing, excavations, electrical installation, or any other tasks you won't be taking care of yourself.
Changes in Work Clause
A construction contract agreement must always include 'changes in work' clause. This outlines the procedure to follow in case there needs to be an amendment done to the contract (change orders) changing the scope of work, and thus the prices as well as the time needed for completion.
Many contractors include a dispute resolution clause as a way to settle any legal conflicts more quickly, cheaply, and secretly. To do so, you must select a venue or jurisdiction for the resolution of disagreements and complaints regarding your performance or accomplishment of the task. It's important that both parties agree to this. Mediation, arbitration and adjudication are some of the most common ways for settling disputes instead of going to court.
Include a section to provide details about what your warranty includes and how long it will be valid for. There are usually two types of warranties you could offer for construction services; the workmanship warranty, where you guarantee that your work will be free of flaws and done in a "workmanlike manner", and applies to both materials and labor. The other kind is warranty of habitability which declares that structures will be safe to live in and suitable for the purpose for which they are intended.
Signature and Date
Finally, include a section for a signature and the date when the document is signed. Make sure you leave enough space for each party to sign with the printed/typed name, phone number and address below the signature. You could also include extra space for an email address.
Write Bulletproof Construction Contracts With Our Free Templates
If you don't have the time to create your own contract template, or are still not sure how to structure it properly, don't worry, you don't have to do it yourself. Simply download Bonsai's free construction contract template which you can easily customize to fit your business and project needs. All of our templates have been reviewed and approved by legal experts so you can be sure your construction business will be protected.
Once you have your contract ready to go, you can streamline all the formalities by sending it online through a secure link and requesting a legally binding e-signature. This will all be done within the same online document, and you will receive a notification once your contract is received and signed.
Aside from helping you draft the perfect contractor agreement, Bonsai can also help you with multiple other administrative tasks such as proposals, builders invoicing, accounting and taxes. Using our platform you can also apply for a dedicated checking account, which you can link to the rest of the tools we offer and keep all of your business finances under control in the same place. Check out these and many more benefits with our free 14-day trial! We help you save time so you can focus on your passion, not your paperwork.