Ten Crucial Clauses to Incorporate in Your Construction Contract Agreement

In any construction project, we know that an agreement is worked out between the business owner and the parties involved in the project. This is one of the most important documents that decides the fate of the project to a large extent. The construction contract agreement must comprise a few essential elements or so-called clauses that are crucial for both parties.

In this write-up, we will talk about the same in brief in the paragraphs that follow.

What are the ten clauses that must be included in the agreement?

The following provisions must be considered for inclusion in the contract.

    1. Identify the details of the parties involved.

      The details that help in identifying all the parties involved in the project must be included first. The details include the names, addresses of the house or office, and contact details like email ID and cell phone number.


    1. A detailed description of the project and property.

      The property or the premises where the project is located should be explained in detail. Remember, this is one clause where you cannot compromise with any point. None of the points must be left out. The three most important clauses usually related to-

      • Raw materials used
      • Blueprint of the end product
      • Quality of the raw materials


    1. Permits and licenses
      If you are constructing a structure on a property, you will require to obtain certain permits and licenses. These are usually given by the local municipal bodies. The name of the party that is supposed to obtain the license is entered as well.


    1. Contingency plans

      The contract agreement for construction work should also include a contingency plan. This is important because in the event of an emergency or a contingency, both parties will be aware, and an alternative plan can be worked out beforehand.


    1. Act of God

      Also known as the force majeure clause will allow all parties to do away with any liability if there is a breach of contract. This usually occurs for certain conditions that are not within the control of the parties. One of the typical examples is when the Covid-19 pandemic made lives miserable and forced many business entities to bring down their shutters.


    1. Right to stop work

      The contractor can exercise the right to halt work. The conditions under which this may occur include obligations when they are not fulfilled by the property owners. The stop work clause in the construction contract agreement is a legal right to stop work if payment is not completed by clients or owners.


    1. Right to stop payment

      Just as there is a clause in the contract agreement for construction work for the contractors, similarly, this clause gives right to the clients to stop making payments. If the work done is not as expected and up to the mark or as per the expectation of the client, this clause can come into play.


    1. Payment schedule and estimated cost

      Once a clear idea is obtained about the project by the contractor, an estimate is obtained. The other parties must be aware of the same. Another very important clause that must be included in the contract agreement for construction work is the payment schedule. They are commonly known as “pay-when-paid” and “pay-if-paid” clauses.


    1. Incentives

      One of how you can ensure that the construction project succeeds is to create incentives. In the event the time, budget, expenses, and scope are not known, the incentives are helpful.


  1. Disposal of materials on completion

    One of the clauses that must be included in the contract agreement for construction work is the obligation to dispose of and clean the new property that has been constructed.
    For drafting the best contract agreement for construction work, seeking professional assistance is the best option. You can approach ContractSquare. For more information on how we may offer our assistance to you in the contract agreement clause, you can reach us at enquiries@contractsquare.co or call +91 9903023893.

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