A well-drafted construction contract should spell out the scope of work, the price and the terms and conditions of payment. Consequently, it is important to protect yourself prior to signing a construction contract by understanding exactly what it is you are committing yourself to.
The details in the contract should meet the needs of both parties as well as considering the scope of work with regards to time taken.
Prices, Payment methods and penalties
The agreement should clearly state prices. Be wary of additional charges that you have not discussed with the other party. Determine the terms of payment and whether it is appropriate to your financial situation. You may also be able to negotiate installment payments if you cannot afford a lump sum. It is also wise to speculate on whether there are late payment penalties and if they are reasonable.
Inability to agree
If you need to have work started immediately, but cannot come to an agreement on the final terms of an agreement, you need to make sure that the contract signing is not binding as a permanent agreement, and is subject to change should both parties reach a permanent agreement.
Resolution of anticipated disputes
Many contracts include an arbitration clause, which means that a dispute must be settled in arbitration as opposed to in court. Arbitration is generally less costly and less formal than court, but if you sign the contract with the clause intact, you have probably waived your right to take the matter to court.
People prone to breaching contracts should look out for this clause.