Learn These Terms to Protect Your Business

October 18, 2016

The Dotted Line: 5 of the most commonly misinterpreted terms in construction contracts

Source: ConstructionDIVE, Kim Slowey, October 4, 2016

People are fallible, and misunderstandings are a part of life. Construction work is no exception. However, when it comes to construction contracts, time and money are at stake. A lack of legal background is, of course, one of the primary drivers behind misinterpretations, but there’s also the fact that many contractors think they’ve seen and know everything based on experience.

“Most construction contractors follow custom and standard practice in the industry, or what they’ve always done in the past,” said Chicago attorney Matthew Horn, a long-time construction law attorney and founder of Legal Services Link. “But when something goes wrong … that’s when you get into litigation.” Horn said that it doesn’t even have to be a “newbie” in the construction business who gets it wrong. “It’s not unusual for (experienced) parties to a construction contract not to fully understand what it says,” he said.

Attorney Ken Perry, with Perry & Aronin in New York, said the degree to which contractors should worry about misinterpreting the terms in a contract often varies depending on how well they know the other party. He said it’s always smart to scrutinize a contract no matter the source, but he added that the odds of a positive outcome in the event of a misunderstanding are always higher when doing business with a trusted partner. “Relationships are the most important consideration,” he said. “Know who you’re dealing with.”

Attorney Daryl Williams, with Baird Williams & Greer in Phoenix, said, “There are some people who can work with others on a handshake, and that is the best type of relationship, but a contract with a new party … who will not consent to simple things — or demands extraordinary things — means you are in trouble.” Williams said contractors, as well as other parties, enter into contracts for the protection they provide, so contractors need to pay close attention to any “form contract” from the other party. “You can count on the fact that the form produced by the other side is slanted it its favor,” he said.  READ MORE….

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