When building and construction contract disputes arise, it’s costly and causes a number of issues for many involved in the project. Pre-contract review is crucial so that your business ensures the contract accurately and precisely records the agreed terms between the parties while adequately balancing the risks.
A well-drafted construction contract should provide certainty for both parties in relation to a construction project and minimise disputes. It will outline key commercial and legal terms of the arrangement between the parties and allocate construction-specific risks and liabilities between them.
The common standard form construction contracts (such as the Australian Standard (AS) contracts) are often used in construction projects for its accessibility and standardised terms and conditions familiar to participants within the industry. In reality, AS contracts are often heavily amended and incorporate ample special conditions to, for example, reflect the agreed terms or re-adjust the risk profile between the parties. For that reason, a review of the contract should be undertaken to fully understand the implications of the terms and what amendments and special conditions may be required to allocate the parties’ obligations and risk.
The AS contracts are typically only the general conditions of a contract. Other documents such as the instrument of agreement will sit over the top of the general conditions and create the framework for the commercial details. Schedules may also be attached to the instrument to capture the project details. Therefore, the entirety of the construction contract requires a close examination to ensure it accurately captures the agreed terms between the parties, achieves your business’ goals and protects your business’ interests.
Having a building and construction lawyer review the construction contract before it is signed will help you flag clauses that are unfavourable to your business and negotiate better terms to minimise your risk profile. Because construction projects involve a unique risk profile compared to other commercial arrangements it is so important to seek pre-contract advice from an experienced building and construction lawyer before you sign on the dotted line to ensure risks are managed and distributed fairly and reasonably.
If you need pre-contract advice, contact Cohen Legal’s experienced building and construction lawyers. Our business is protecting yours.