4 Critical Contract Elements Before Hiring A Contractor

Before conducting business with any contractor, you should always have a written contract in place. The purpose of the contract is to specify the obligations of each party and how risk will be shared between them. Construction projects can be complicated.

For your next project, consider the following critical contract elements:


If you are hiring a contractor, make sure that your contract includes indemnity clauses. An indemnity agreement will protect you and allow others to bear any costs associated with damages in the event of a claim. This is important because it will reduce your risk and lessen your legal expenses.


Every contact should include a scope or statement of work. This clearly states what’s expected of both parties and describes what services are being exchanged for payment. It should also mention the schedule and time frame so both parties are on the same page.


This one’s a no brainer. Having your payment terms and conditions clearly stated in your contract will help to prevent any dispute should one arise. The more specific your contract is the better protection for you and your company.


In the real estate and construction industry, not all projects run smoothly. Things change, and some time construction takes longer than expected. Or, perhaps there is a defect in the design or a severe storm.  Your contract should include clauses that describe what would happen in a situation when work is delayed or disrupted.

The biggest mistake you can make is having an oral agreement rather than a written contract when working with a contractor. The language in your contract should be clear and unambiguous in order to provide you with the best protection. If you have any questions about critical contract elements and risk transfer between parties in a contract, let’s talk!


Opinions expressed in this article are solely the author’s opinion, not intended to provide the reader with legal or any other professional advice. Should you need advice or opinion, consult with a qualified professional to address your specific needs.

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