It is worthwhile to prepare a construction contract well to avoid years of litigation

The law firm’s lawyers provided legal support to the Client – a general construction contractor – in the process of concluding a construction contract with the investor for a multi-family building. The contract was implemented under the “build out” formula.

The Client asked the law firm to identify the risks associated with the implementation of the contract on the terms proposed by the investor and to introduce amendments to the contract to secure its interests and minimize the risks.

As part of the legal service, a legal analysis of the documentation and the draft construction contract was carried out, and appropriate changes were made to the draft contract.

The law lirm’s attorneys focused on developing contractual provisions that are in line with the Client’s business assumptions, primarily in the following areas:

• defining the scope of work and works to be performed;
• payment terms and conditions;
• terms of acceptance of the investment;
• conditions for release and use of performance bond and security for removal of defects and faults during the warranty and guarantee period;
• withdrawal from the contract;
• contractual penalties;
• terms of contractual warranty and guarantee.

Lawyers also advised the Client during the execution stage of the investment, with regard to the possibility of stopping the work, withdrawal from the contract, obtaining a guarantee of payment from the investor and other possibilities of securing the Client’s interests in connection with the investor’s delay in payment of remuneration for the construction work performed.

Thanks to a well-prepared construction contract, all risks on the part of the Client related to non-payment of remuneration by the investor were eliminated already at the stage of contract execution.

The above case shows that a well-prepared contract avoids the need to pursue one’s claims in court, which involves a lot of time and financial resources of every entrepreneur.