Builders: What Are the Most Important Clauses in Construction Contracts?
By Contracts Specialist|December 07, 2022
What is a Contract Clause?
A contract clause is a specific provision or segment within any kind of contract. It is a section that addresses a particular condition or aspect that relates to the overall subject matter of the agreement. Each clause is used to define clearly the responsibilities, rights, and privileges of both contractual parties.
Basically, a contract clause is a set of terms that can be found in various parts of a construction contract. This is an important part of any agreement, especially for building and construction matters.
“Before you use and sign a construction contract, we recommend you to know the common contract clauses and how these might affect your legal rights.”
Construction: What are the Common Contract Clauses?
Just to be clear, specific contract clauses are used depending on the needs of the contractual parties. The common contract clauses can, of course, be found in most standard contracts.
However, the Security of Payment Act can always help contractors, builders, and
subcontractors by protecting their legal right to payment.
Incorporating dispute resolution clauses is essential, so it should be well-drafted and
clear. There is a 90% chance of you getting into a dispute within a project so you should
be prepared when this happens.
Key Contract Provisions in a Construction
Contracts are undeniably long and detailed but you should read the following clauses twice because you’re taking a big risk if you let these pass.
1. No Damage for Delay Clause
Each builder must always carefully examine the contract to know if there is a No Damage for Delay clause. This provision implies that whilst the contractor or subbie is not entitled to claim damages, they will be entitled to an extension of time.
2. Contractors Review of Documents
Homeowners often seek to add an exculpatory clause (exculpat means “freed from blame”) to pass liability on to contractors or subcontractors when defects occur.
3. Indemnity Clause
This is a common element of contracts. It is used to shift potential costs from one party to another. An indemnity clause states that one party agrees to “indemnify” (and often also to “hold harmless” and “defend”) the other party.
A contract clause is a specific provision or segment within any kind of contract. It is a section that addresses a particular condition or aspect that relates to the overall subject matter of the agreement. Each clause is used to define clearly the responsibilities, rights, and privileges of both contractual parties.
Basically, a contract clause is a set of terms that can be found in various parts of a construction contract. This is an important part of any agreement, especially for building and construction matters.
“Before you use and sign a construction contract, we recommend you to know the common contract clauses and how these might affect your legal rights.”
Construction: What are the Common Contract Clauses?
Just to be clear, specific contract clauses are used depending on the needs of the contractual parties. The common contract clauses can, of course, be found in most standard contracts.
- Choice of Law Clause
- The Statute of Limitations Clause
- Time of Performance Clause
- The Essential Construction Contract Clauses
- Termination Clause
- Payment Clause
However, the Security of Payment Act can always help contractors, builders, and
subcontractors by protecting their legal right to payment.
- Dispute Resolution Clause
Incorporating dispute resolution clauses is essential, so it should be well-drafted and
clear. There is a 90% chance of you getting into a dispute within a project so you should
be prepared when this happens.
Key Contract Provisions in a Construction
Contracts are undeniably long and detailed but you should read the following clauses twice because you’re taking a big risk if you let these pass.
1. No Damage for Delay Clause
Each builder must always carefully examine the contract to know if there is a No Damage for Delay clause. This provision implies that whilst the contractor or subbie is not entitled to claim damages, they will be entitled to an extension of time.
2. Contractors Review of Documents
Homeowners often seek to add an exculpatory clause (exculpat means “freed from blame”) to pass liability on to contractors or subcontractors when defects occur.
3. Indemnity Clause
This is a common element of contracts. It is used to shift potential costs from one party to another. An indemnity clause states that one party agrees to “indemnify” (and often also to “hold harmless” and “defend”) the other party.
