Understanding Building And Construction Contracts

A construction contract is an legally binding or mutual agreement between two parties, usually based on written contracts, relating to the construction of buildings and structures. Two parties typically involved in a construction contract would be one property owner and one property contractor. In the United States, construction contracts are usually used to guarantee the payment of specified amount of money for a certain period of time. The term of a construction contract typically refers to the total amount of money that will be paid to the contractors, for the completion of the project. Contractors are then paid a sum of money, in return for their services in building and erecting a building or structure. Click for more info

What Is Understanding Building And Construction Contracts And How Does It Work?

building and construction contracts

The construction contracts have various details that need to be understood before signing it. In general terms, the contract will state the responsibilities and liabilities of each of the parties involved, as well as all the relevant clauses. These clauses may include specific duties and responsibilities of both the contractor and the owner, financial statements, specifications, deadlines, etc. A construction contract is usually considered binding, but its enforceability can be determined by a number of legal factors.

A contract usually only specifies the cost plus the sum of funds, which is the sum of money that has been agreed upon between the two companies involved in the construction, and is the total amount that has been approved by the local government as the maximum amount to be charged for a particular period of time. This cost plus the progress payment is called the incentive payment, which is normally given to the contractor once the contract has been successfully concluded. Contractors may also be entitled to tax incentives as well as a credit against their tax liabilities. Another factor that would affect the incentive payment is the local planning authority’s decision regarding the minimum density requirements for residential areas.

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October 2021

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