Robust and accurate contract documentation is the first step to ensuring the success of a construction project. The most effective way to avoid disputes and minimise project risks is to:
- obtain legal advice prior to entering into the contract so you are completely aware of what you’re getting into and the costs if the contract does go pear-shaped; and
- diligently engage in effective contract administration throughout the length of the project.
It is extremely common for parties to enter into contracts which are not consistent with the terms they think they are agreeing to. For example, the important terms of the builder’s quotation will often not make it into the contract or will be given a lower precedence than other contract documents, and general conditions of contract will regularly go unread. A small investment at the start of a project to ensure the contract documents are in order can often mean the difference between making a profit or a significant loss at the end of the project, for both parties.
In the Australian construction industry there are “standard” contract terms which are generally accepted to impose reasonable obligations on both parties and to provide for a fair allocation of risk. However, these standard terms are often amended to reallocate risk, to impose additional obligations on one party and reduce potential liability of another or to simply assist with contract administration. The important thing is that both parties are aware of the contract terms, so they know what they are signing up to and the contract price is a proper reflection of the bargain being reached.
Without sacrificing attention to detail, a pragmatic approach to contract drafting and negotiation is crucial, and needs to take into account the value of the project, any unique aspects of the project, the bargaining position of the parties, when construction is due to commence and other less tangible matters such as the parties’ personalities and existing relationships.
Engaging Dark Legal to undertake a comprehensive review of your contract ensures that you don’t miss any of the nuances that could trip you up in the future and eat into your profits. We will identify risks, provide commercial solutions where appropriate and ensure that you and your employees know conditions to look out for.
Importantly, we will take the time to set you up with the best internal procedures, tailor made to your business and the contract, to minimise the time spent on contract administration and to ensure the likelihood of you or one of your employees dropping the ball.
